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McGraw-Hill Construction

PresidentNorbert W. Young, Jr., FAIA

McGraw-Hill Construction Research & Analytics/Alliances

Vice President, Global Thought Leadership & Business DevelopmentHarvey M. Bernstein, F. ASCE, LEED AP

Senior Director, Research & AnalyticsBurleigh Morton

Director, Green Content & Research CommunicationsMichele A. Russo, LEED AP

Director, Market ResearchJohn DiStefano, MRA, PRC

Director, Industry AlliancesJohn Gudgel

Reproduction or dissemination of any information contained herein is granted only by contract or prior written permission from McGraw-Hill Construction.

Green Building: Retrofit and Renovation SmartMarket Report

Editorial DirectorMichele A. Russo, LEED AP

Editor-in-ChiefDonna Laquidara-Carr, LEED AP

Contributing EditorJulie Miltner, LEED AP

Senior Group Art DirectorFrancesca Messina

Contributing Art DirectorDonald Partyka

Managing Art DirectorTed Keller

Production ManagerAlison Lorenz

Research Project ManagerRichard Goodier, MRA, PRC, LEED AP

ContributorsCatlin O’Shaughnessy, LEED APMonica Andrews

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SmartMarket Report

About McGraw-Hill ConstructionMcGraw-Hill Construction (MHC), part of The McGraw-Hill Companies, connects people, projects and products across the design and construction industry, serving owners, architects, engineers, general contractors, subcontractors, building product manufacturers, suppliers, dealers, distributors and adjacent markets.

A reliable and trusted source for more than a century, MHC has remained North America’s leading provider of construction project and product information, plans and specifications, industry news, market research, and industry trends and forecasts. In recent years, MHC has emerged as an industry leader in the crit-ical areas of sustainability and interoperability as well.

In print, online, and through events, MHC offers a variety of tools, applications, and resources that embed in the workflow of our customers, providing them with the information and intelligence they need to be more productive, successful, and competitive.

Backed by the power of Dodge, Sweets, Architectural Record, Engineering News-Record (ENR), GreenSource and 11 regional publications, McGraw-Hill Construction serves more than one million customers within the $5.6 trillion global construction community. To learn more, visit us at www.construction.com

ResourcesOrganizations, websites and publications that can help you get smarter about green retrofit, renovation and new building

Acknowledgements:

The authors wish to thank our sponsors Autodesk, Siemens and UL Environ-ment, Inc. for helping us bring this information to the market. Specifically, we would like to thank Catherine Palmer and Sarah Hodges; Autodesk; Brad Haeberle and Ari Kobb, Siemens; and Christopher Nelson, Stephen H. Wenc and Julia Farber, UL Environment, Inc.

As always, thanks to the U.S. Green Building Council for their support, in particular Rick Fedrizzi, Rebecca Flora, Doug Gatlin, Tom Dietsche, Anthony Guma, Karol Kaiser, Marc Heisterkamp and Ashley Katz.

A sincere thanks to Chris Ludeman and Raymond Torto from CB Richard Ellis for providing the prospects list for the market research.

Additional thanks to the team at GSA; Kelly Romano and Mary Milmoe, Carrier Corp.; and Chris MacFadden, Turner Construction for their support in the project.

We would also like to thank the many individuals who provided detailed project and performance data on their case study projects as well as Gordon Gill, Adrian Smith and Bob Peck for providing their insights.

Federal GovernmentU.S. Department of EnergyMain website: energy.govOffice of Energy Efficiency and Renewable Energy (EERE): eere.energy.govNational Renewable Energy Laboratory: nrel.gov

U.S. Environmental Protection AgencyMain website: epa.govEnergy Star: energystar.govWaterSense: epa.gov/WaterSense

U.S. General Services Administration: gsa.gov

National Institute of Standards and Technology: nist.gov

American Recovery and Reinvestment Act 2009: recovery.gov

Academia and Nonprofit OrganizationsAlliance to Save Energy: ase.orgAmerican Council for an Energy-Efficient Economy: aceee.orgThe American Institute of Architects (AIA): aia.orgAssociated Builders and Contractors, inc. (ABC): abc.orgAssociated General Contractors of America (AGC): agc.orgBuilding Owners and Managers Association International (BOMA): boma.orgCarnegie Mellon University,

Center for the Building Performance and Diagnostics: arc.cmu.edu/cbpdDatabase for State Incentives for Renewable Energy (DSIRE): dsireusa.orgGreen Building Initiative: thegbi.orgNational Association of Counties (NACo): naco.orgSustainable Buildings Industry Council (SBIC): sbicouncil.orgUniversity of California, Berkeley,

Center for the Built Environment: cbe.berkeley.eduU.S. Conference of Mayors: mayors.orgU.S. Green Building Council: usgbc.org

OtherBuilding Green, LLC: buildinggreen.com

Main Website: construction.com

GreenSource: greensourcemag.com

Research & Analytics: construction.com/market_research

Achitectural Record: archrecord.com

Engineering News-Record: enr.com

Sweets: sweets.com

Green Reports: greensource.construction.com/resources/SmartMarket.asp

usa.siemens.com/industry■■

ulenvironment.com■■

ul.com■■

usgbc.org■■

Green Building Certification Institute: gbci.org■■

autodesk.com■■

autodesk.com/sustainabledesignguide■■

cbre.com■■

1335cvr.indd 2 10/16/09 6:27:11 PM

McGraw-Hill Construction 1 www.construction.com SmartMarket Reports

Harvey M. Bernstein, F.ASCE, LEED AP has been a leader in the engineering and construc-tion industry for over 30 years. He serves as Vice President of Global Thought Leadership and Business Development for MHC, where among other things, he has lead responsibility for MHC’s green building and thought leadership initiatives, including MHC’s first-ever landmark stud-ies on green construction and key market trends in the U.S. and globally. Bernstein was also one of the team members involved in launching MHC’s GreenSource magazine. Previously, Bernstein

served as President and CEO of the Civil Engineering Research Foundation. He has written numerous papers covering inno-vation and sustainability, and currently serves as a member of the Princeton University Civil and Environmental Engineering Advisory Council, the Harvard Joint Center for Housing Studies Policy Advisory Board, and as a visiting Professor with the University of Reading’s School of Construction Management and Engineering in England where he also serves on their Innovative Construction Research Centre Advisory Board. Bernstein has an

M.B.A. from Loyola College, an M.S. in engineering from Princ-eton University and a B.S. in civil engineering from the New Jersey Institute of Technology.

Michele A. Russo, LEED AP, has been working in environ-mental policy and communica-tions for 15 years. She currently serves as MHC’s Director of Green Content & Research Com-munications where she is respon-sible for helping direct the green content across MHC’s portfolio of products and services, includ-ing the management of MHC’s SmartMarket Report series.

Russo is also a contributor to The McGraw-Hill Companies’ corpo-rate initiatives around sustain-ability. Previously, she served as Executive Director of the Clean Beaches Council and Deputy Director of the National Pollution Prevention Roundtable. She has authored several articles around pollution prevention and toxics reduction and is a frequent speaker on green building trends and environmental policy. Russo has a B.S. in Chemical Engineer-ing from Cornell University and a Masters in Public Policy from Harvard University’s Kennedy School of Government.

Only 1.5–2.5% of the U.S. building stock is new each year. Additionally, many of the 4.4 million non-resi-dential buildings that make up this

space are highly inefficient and represent a prime opportunity for green building retrofits.

Therefore, we thought it was critical to investigate the share of the retrofit and renovation market that was green.

What we found is that growth in green ret-rofits is occuring more rapidly than growth in new green buildings. Today, green building comprises 5-9% of retrofit and renova-tion market activity by value—projected to grow to 20-30% in just five years.

Additionally, the trends revealed by the market research and qualitative case studies profiled in this report point to dramatic growth in the longer-term (10-20 years) as owners—both public and private—face mounting pressures to upgrade their build-ings to be green, and as tenants look for ways to improve satisfaction with and the perfor-mance of their building spaces.

Several key results:

86% of commercial building owners expect the ■■

green retrofit market to grow, with half expecting

it to increase 20% or more over just three years.

The downturn is encouraging adoption ■■

of energy- and water-efficient practices in

renovation projects.

70% of owners who have engaged in green retrofit ■■

or renovation activities are planning to continue

to do so for over 15% of future renovation projects;

24% will do so on over 60% of projects.

The fact that such high rates of future activity are reported—coupled with signif-icant government intervention—suggests tremendous market opportunity for industry players offering green building services and products. Not surprisingly, those products and services oriented around energy-efficiency, such as lighting and building controls, have the greatest opportunity.

For the first time, we also profiled over 20 projects (pages 40-64). We felt their inclusion was critical in order to provide qualitative insights to accompany the data. It became clear that though projects are unique in many ways, they all share one thing in common—quantifiable business benefits (demonstrated through energy and water bills and audits). In some cases, further paybacks were measured and reported, such as higher occupancy, rents and tenant satisfaction.

We are very pleased that Autodesk, Siemens and UL Environment, Inc. supported this study to help bring it to the market. We also thank our partners at CB Richard Ellis and the U.S. Green Building Council for helping this study come to light.

As always, we at MHC are committed to continuing to serve as the “voice of the industry,” creating a complete “network” of green building information, resources and expertise through our publications, analytics work, market research and Network database of construction projects and products.

For more information on the methodology, see page 38.

Introduction

Harvey M. BernsteinF.ASCE, LEED APVice PresidentGlobal Thought Leadership & Business DevelopmentMcGraw-Hill Construction

Michele A. RussoLEED APDirectorGreen Content & Research CommunicationsMcGraw-Hill Construction

SmartMarket ReportG

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SmartMarket Report

SmartMarket Reports McGraw-Hill Construction 2 www.construction.com

green building retrofit and renovation

4 Executive Summary

7 Data 7 sidebar green retrofit Market opportunity

8 Green Retrofit Market Activity 8 Level of Green Retrofit Activity 9 Future Growth of the Green Retrofit Market

10 Financing the Green Retrofit Market

11 sidebar eSCos and the green retrofit Market

12 Green Retrofit Market Profile 12 Age of Buildings Involved in Green Retrofit 12 Size of a Firm’s Green Retrofit Investment

14 Green Retrofit Business Benefits 14 Measuring Economic Impact 14 Expectation that Energy Cost Savings Will Be Recouped in 10 Years 15 Expected Decrease in Operating Costs 16 Expected Increase in Building Values from Green Retrofit Improvements 16 Expected Increase in ROI 17 Expected Time to Lease Green Retrofitted Space 17 Expected Increase in Overall Occupancy 17 Expected Rent Increase Due to Green Retrofits 18 Tenant Willingness to Pay a Premium for Green Retrofits 18 Importance of Green Retrofitting to Companies Leasing Space

19 sidebar Maximizing business benefits

20 Green Retrofit Market Intelligence 20 Business Motivations for Green Retrofits 21 Environmental and Social Motivations

23 sidebar Achieving Optimal Performance in Green Retrofit & Renovation Projects

24 Green Retrofit Triggers 25 Green Retrofit Challenges

26 Government Effect on Green Retrofit 26 Attitudes about Green and Energy-Efficient Policies 26 Energy Audits 26 Job Creation 26 Stimulus Funding and the Energy-Efficient Market

27 sidebar green Jobs and training 28 Impact of the American Recovery and Reinvestment Act (ARRA) 29 Effectiveness of Government Incentives

30 sidebar government Policies driving green in existing buildings

efficiency


Clockwise from top left:Empire State Building, New York, NY; Armstrong Campus Corporate Headquarters, Lancaster, PA; Founding Farmers Restaurant, Washington, DC

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31 Green Retrofit Practices 31 use of Green Consultants 31 Level of Green Retrofit Activities 32 Types of Green Retrofit Activities 33 Specific Green Retrofit Systems and Product Types

33 Energy-Efficient Mechanical Systems 33 Energy-Efficient Lighting 34 Occupancy Comfort 34 Other Product Systems and Types

35 Green Building Products

36 Performance Ratings and Green Certification

37 sidebar green retrofitting in the global Marketplace

38 Methodology

39 Case Studies 39 Case Study Trends

65 Resources

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The results of this latest research, combined with McGraw-Hill Construction proprietary data, demonstrate a growing share for green building in the retrofit and renovation marketplace. Furthermore, market opinion as well as other government and market indicators suggest ongoing, dramatically higher activity in the longer term (10-20 years)—both for retrofit and renovation activity overall as well as for the green share.

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With 76.9 billion square feet of existing building stock and a number of inefficient buildings, green building has a tremendous long-term opportunity to dramatically reduce U.S. energy consumption and greenhouse gas emissions.

Green Building Retrofit Market Poses Strong Growth Over Next 5 YearsThe growth in green building retrofit projects repre-sents significant opportunity for the industry.

2009Green building retrofit and renovation market ■■

share: 5–9% by value

Market opportunity for major projects (those over ■■

$1 million): $2.1–3.7 billion

2014Green building retrofit and renovation market ■■

share: 20–30% by value

Market opportunity for major projects (those over ■■

$1 million): $10.1–15.1 billion

More broadly, there is significant opportunity in the retrofit market for energy-efficient buildings—one aspect of a green building (see page 8). Currently, this market share is estimated at 66–75% by value and expected to grow to 85–95% in five years (see values in chart at top right).

Owners and Tenants with Green Retrofit Experience Are Likely to Do More Green Retrofit Projectsowners and tenants who have completed green retro-fit and renovation projects are likely to repeat that activity. Furthermore, level of involvment is strong.

70% of owners indicate that over 15% of the retrofit ■■

projects they have done or have planned are green.

24% are greening over 60% of their projects.■■

More tenants fall into the two extremes—One-third ■■

are committed to green retrofits for over 60% of their projects, while 17% are not yet commited.

Market SummaryGreen Retrofit and Renovation Pose Significant Future Market Opportunity for Green Building

■ Owners ■ Tenants

Exploring Whether or Not to Undertake a Green Retrofit (0%)

8%

17%

1–15% of Projects Were/Will Be Green Retrofit22%

25%

16–30% of Projects Were/Will Be Green Retrofit

32%

4%


14%

21%

More than 60% of Projects Were/Will Be Green Retrofit

24%

33%

Current Level of Green Retrofit ActivitySource: McGraw-Hill Construction, 2009.

Green Retrofit Market Opportunity (nonresidential buildings), in billions of dollars

GReen BUILDInG

eneRGy effIcIency

GReen BUILDInG

eneRGy effIcIency

Source: McGraw-Hill Construction, 2009

$2.1 $3.7 billion

$27.2 $30.9

$10.1 $15.1 billion

$42.9 $47.9

2014

2009

■ Low ■ High■ ■

5% 9%

66% 75%

20% 30%

85% 95%

Continued


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Expected by Owners86% of owners expect the green retrofit market to grow in the next 3 years. That growth is expected at fairly high levels (see chart at right).

31% expect the market to grow by over 30%■■

Half expect that growth to be 20% or more■■

Owners Expect to Recoup their Investments Through Cost Savings62% of owners expect the savings achieved from energy-efficiency improvements to recoup their investment within 10 years (see pie chart at bottom).

Almost all of the case study participants report expect-■■

ing payback within 5 years on the operating cost savings of their green retrofit projects, demonstrat-ing the market’s conservative nature in estimating payback times.

Green Retrofit Activitiesall owners report using more energy-efficient lighting or natural daylighting in their green retrofit and renova-tion projects. nearly all (92%) also report installing more energy-efficient mechancial and electrical systems.

The other major categories of activities are all being pursued by over 50% of owners, suggesting strong opportunities for all green products and systems across various product category areas.

Market SummaryContinued

30% +

31%

20–29%

19%

10–19%

28%

Under 10%

16%

Don’t Know

6%

Level of Green Retrofit Market Growth Expected (owners)

Source: McGraw-Hill Construction, 2009.

Expectation that Energy Cost Savings Will Be Recouped in 10 Years


■ Agree

■ Disagree

■ neither Agree nor Disagree

27%

11%

62%

■ Owners

Installed More Energy-Efficient Lighting And/Or Made More Use of Natural Daylighting

100%

Installed More Energy-Efficient Mechanical & Electrical Systems92%

Improved Occupancy Comfort Inside the Building79%

Installed More Water-Efficient Plumbing71%

Installed More Environmentally Friendly Finishes & Furnishings66%

Upgraded the Building Envelope61%

Green Retrofit ActivitiesSource: McGraw-Hill Construction, 2009.


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Focus on Business Benefits and PaybacksFinancial benefits are the primary driver for encouraging owners and tenants to pursue green retrofits.

additionally, owners and tenants recognize that there are financial rewards they can reap from green building retrofit and renovation activities.

as a result, industry players, especially service providers and product manufacturers, need to be able to convey the business benefits of their green products and services. Product manufacturers and contractors should understand leed, since it still plays an important role in the market.

industry players should also foster relationships with owners and owner representatives. in the green retrofit market—especially for the plethora of smaller projects under $1 million—owners are making final decisions, or their consultants are. This is different from the new green building market where architects and designers wield significant influence.

Energy-Efficiency Reigns Supreme, but Other Motives Matterenergy-efficiency improvements offer the broadest opportunity in the current market, and given the specific attention being placed on curbing carbon emissions and reducing energy consumption, energy efficiency will continue to be a requirement for green renovation activity. in fact, we believe it will be embedded into all retrofit activity in coming years.

However, green building retrofits include more than just features that improve energy performance. and those additional advantages are appealing—not only do they yield financial rewards, but they also are accompanied by environmental and social paybacks that can, in certain circumstances, be as powerful as money. This is especially true of owners of education and healthcare buildings.

industry players should not confine themselves to thinking about green in water and energy-saving terms. instead, they should be able to speak to the larger gains green offers.

Measurement MattersThere is a noticeable lack of sufficient measurements of the benefits achieved in green retrofits reported by owners and tenants. Furthermore, as policy continues to focus around public reporting, building owners that don’t have systems in place to effective measure their performance—minimally as it relates to energy and water—will lag in the market and ultimate find it costs them significant money to not have these systems in place.

Major opportunities exist for those who can help owners and tenants capture the data they need to find inefficiencies, establish appropriate benchmarks and set long-term goals.

Current Technologies Can Yield Major Benefitsone theme running through many of the case studies was the big boost available from off-the-shelf technologies. Contractors and building product manufacturers need to be able to effectively convey what can be achieved today for minimal investment.

Once a Firm Conducts a Green Retrofit or Renovation, They Are Likely to Do It Againowners and tenants who have completed green retrofit and renovation proj-ects are likely to repeat that activity. as such, they can be a focal point for green building product manufac-turers and service providers as their receptivity to green expertise is highly likely.

Expand and Promote Your Green Building KnowledgeFirms are embracing com-mitments to sustainability. This trend is supported by the emergence of the new Chief Sustainability officer position at large corpora-tions, expansion of large green building portfolio commitments and increas-ing investment in bringing new and innovative prod-ucts to market that have environmentally, fiscally and socially beneficial properties.

as a result, industry players that have knowl-edge about green building trends—particularly as they relate to existing build-ings will be well-positioned for future personal profes-sional growth. ■

Recommendations

Key Conclusions and Recommendations

There is tremendous opportunity in the existing building market for green building products, processes and services. Through strategic planning, preparation and initiatives, industry players of all types can maximize this expanding retrofit market, and the growing share that is green.


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Green Retrofit Market OpportunityThe market opportunity for green building has grown dramatically— in both new and existing buildings. By 2014, the green building market share of all retrofit, alterations and renovation activity is expected to be 20%–30% by value.

Existing Buildings Todaythe current u.S. built environment is comprised of 76.9 billion sq. ft.1, including over 4.4 million nonresi-dential buildings2. in comparison, only 1.8% of this was new in 2008.3

today’s building stock also includes some extremely inefficient buildings. as can be seen below, buildings constructed after 1970 consume significantly more energy per square foot as compared to older buildings. given that they comprise 60% of the building stock, there exists strong opportunity for green.

in 2009, the value of the overall major retrofit and alteration market (projects over $1 million) is fore-cast to be $41.2 billion. it is expected to grow to over $50 billion by 20144.

However, because the renovation market also includes thousands of small projects not captured in this value, the full renovation market is likely 1.5 to 2 times higher.

Green Building Retrofitstoday, we project the green share (see page 8 for definition) of the retro-fit and renovation market to be 5–9% by value—equating to a $2–4 billion marketplace for major projects.

by 2014, that share is expected to increase to 20–30%—a $10–15 billion market for major retrofit projects.

More broadly, we expect an over-whelming amount of the retrofit market to pose an opportunity for energy efficiency since the nature of a retrofit or renovation project is to

create a higher performing building. today, that market is expected to be 66-75% of retrofit activity, growing to comprise 85–95% by 2014.

dramatic increases in green retrofit activity is expected over the longer-term (10–15 years) after major legislative and competitive drivers force building owners to engage in retrofit projects (most notably to address climate change). this will significantly increase both the base of all retrofit activity as well as the green share, which by then, is expected to have reached its tipping point.

the sectors with the largest green retrofit opportunity are education and office (~50% of all retrofit activity), with the biggest growth in retail. ■

Sidebar: Market Activity

1 McGraw-Hill Construction Building Stock Database (2009, data through end of 2008); 2 U. S. Department of Energy, Energy Information Administration, 2006; 3 McGraw-Hill Construction Building Stock Database (2009, data through end of 2008); 4 Construction Market Forecasting Service, McGraw-Hill Construction as of October 2009

Energy Use in Buildings by Age (thousand btu/sq. ft.)Source: U.S. Department of Energy, Energy Information Administration, 2006.

Before 1920

72.651920–1945

94.921946 –1959

101.781960–1969

122.751970–1979

163.521980–1989

186.331990–1999

166.822000–2003

166.82

nuMber of buildingS

318,000

499,000

541,000

571,000

700,000

668,000

809,000

298,000

Green Retrofit Market Opportunity (nonresidential buildings), in billions of dollars

GReen BUILDInG

eneRGy effIcIency

GReen BUILDInG

eneRGy effIcIency

Source: McGraw-Hill Construction, 2009

$2.1 $3.7 billion

$27.2 $30.9

$10.1 $15.1 billion

$42.9 $47.9

2014

2009

■ Low ■ High■ ■

5% 9%

66% 75%

20% 30%

85% 95%


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ta The greatest opportunity for green design and construction activity lies not in constructing new green buildings, but in engaging in the retrofit and renovation of the existing build-ing stock. recent legislation has focused on increasing energy

efficiency in existing buildings (see page 30), but a true green retro-fit addresses more than energy performance. in fact, green approaches to retrofit and renovation projects lead to a multitude of benefits: lower energy use, reduced greenhouse gas emissions, water savings and better indoor environmental quality.

this study focuses on the attitudes and behaviors of commercial building owners and tenants who had already committed to doing green retrofits before many of the major incentives—from the american recovery and reinvestment act to potential incentives from climate legislation—were known or available. therefore, the results reveal what drives the private sector to embrace green retrofits, what benefits they expect to receive and where they think this market is going in the future.

Note About the Data The sample of build-ing owners who have done or will do a green retrofit interviewed in this survey is statisti-cally valid. However, the sample size of ten-ants who qualified was smaller. Findings and con-clusions about build-ing owner opinions are considered quan-titative, while inter-pretations of tenant behavior are qualita-tive in nature.

For full methodology, see page 38.

Owners who engage in green retrofit and renovation* activity tend to do so for multiple projects—70% of owners who have done or are planning to do a green retrofit project state that 16% or more of their projects are green retrofits. furthermore, nearly a quarter of owners (24%) engaging in retrofit activity report that more than 60% of those projects are green.

this finding suggests that building owners undertake green retrofit and renovation projects in a holistic fashion, rather than just doing one or two showcase green projects.

on the other hand, tenants appear to fall at either the high or low end in terms of level of green retrofit activity.

33% highly dedicated to making the majority (more than ■■

60%) of retrofit projects green

17% not yet committed■■

* a “green” project is one that employs multiple practices, prod-ucts and processes covering a minimum of three out of five aspects of green building—energy, water or resource efficiency, improved indoor environmental quality or responsible site management.


Exploring Whether or Not to Undertake a Green Retrofit (0%)

8%

17%

1–15% of Projects Were/Will Be Green Retrofit22%

25%


32%

4%


14%

21%

More than 60% of Projects Were/Will Be Green Retrofit

24%

33%

Current Level of Green Retrofit Activity


IntroductionData:

Level of Green Retrofit Activity

Market Activity


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ta Eighty-six percent of building owners expect the U.S. commercial green retrofit market to grow. out of the remaining 14%, no building owners expect the market to decline—all believe it will at least remain stable.

once again, this finding confirms the expected growth of the green building market reported in The Green Outlook, Commercial & Institutional Green Building SmartMarket Report and other industry studies. additionally, it demonstrates that this growth applies not only to new construction, but also to retrofits and renovations of existing buildings.

those building owners who expect growth in the green retrofit market anticipate strong levels of growth: 50% expect an increase of 20% or more.

as a group, building owners—especially those with a portfolio of buildings—are more likely to have active

construction projects on a regular basis than tenants, making their expected growth levels noteworthy.

the overwhelming agreement that the green retrofit market is increasing, coupled with its high rate of expected growth, is particularly notable in the midst of the current economic downturn. Strong growth in green retrofit and renovation activity is predicted by the majority of building owners despite the many downward pressures on overall construction due to today’s economy.

these results provide a clear signal to the industry—particularly product manufacturers—that green will play an important role in the future design and construction of renovations and retrofits of existing buildings. accordingly, the industry should include these considerations in their business planning.

COntInUED

Sizing the Commercial Green Retrofit MarketA qualitative indicator of the level of adoption of commercial green retrofit projects is the incidence of building owners and tenants who qualified to be part of the study out of the overall population contacted. That incidence was 10%, which does cor-respond to the overall market size project-sion across all build-ings types on page 7.

50% +

16%

40–49%

6%

30–39%

9%

20–29%

19%

10–19%

28%

Under 10%

16%

Don’t Know

6%

Market will…

grow

86%remain stable

14%

Future Growth of the Green Retrofit Market

U.S. Commercial Green Retrofit Market(owner projections for the next 3 years)


Level of Green Retrofit Market Growth Expected (owners)



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ta Owners and tenants most frequently use profits to finance their green retrofit projects, but they also often rely on multiple measures rather than just one means of financing. the fact that green retrofit projects most frequently derive at least part of their financing from the general corporate budget suggests that most firms doing green retrofits consider them part of normal corporate activity rather than a one-time investment.

Ownersa good portion of building owners are using alternative financing measures in addition to company profits.

41% also use energy-efficiency savings resulting from ■■

the retrofit/renovation.

14% use performance contracting.■■

owners can capitalize on the expected energy savings by using the services of an energy Service Company (eSCo). eSCos finance the upfront cost of the retrofit and take a percentage of the savings achieved. See page 11 for more information on eSCos and their impact on green retrofits.

less than 20% of owners indicate that they used bank loans to finance their green retrofit and renovation proj-ects. this could be due to a combination of factors:

the tightening of credit that has occurred since ■■

the fall of 2008.

the relatively low costs of many renovation projects.■■

Tenantsa sizable portion of tenant respondents report having the building owner fund their retrofit(s) during their lease negotiations, even without specific prompting. this anecdotal evidence supports the emergence of the following trends:

tenants will become a driver to the growth of the ■■

green retrofit market in a region where building owners do not take the initiative themselves.

tenant expectations of leasing green commercial ■■

space can play an important role in driving the green retrofit market.

FinancingData:

Financing Green Retrofits



Company Profits

54%

58%

Energy-Efficiency Savings Resulting from the Retrofit41%

17%

Bank Loan

19%

8%

Performance Contracting

14%

4%

Other Source

46%

33%

CapitalDonors/FundraisingState FundingUtility Rebates

Tenant Improvement Funds

Green LeasesGreen leases are a modification of traditional leases that change the conventional distri-bution of risk and reward between building owners and tenants for alterations, opera-tion and maintenance of buildings. The most widely recommended green lease is a mod-ified “gross lease” with the owner paying all utilities directly and the tenant a fixed fee. Under this agreement, the owner has an incentive to make upgrades that apply throughout the building.

Although owner modifications can have the biggest impact, tenants also need to actively adopt green building goals to achieve maximum efficiency. The most crit-ical improvement an owner can make to encourage change in tenant behaviors is to install separate metering of all utilities and energy for each tenant space. Real-time data and control systems can also influence better energy and water use. Tenant rewards and/or penalties for their impact on the build-ing’s energy and water use can be built into the modified green lease.


ESCOs and the Green Retrofit Market

Current Market and Future Outlook of the Use of Energy Service Companies to Improve Energy Efficiency in Buildings

The business argument for energy-efficiency upgrades has been well established for years.

a recent study by McKinsey looking at the potential of the market states that energy-efficiency improvements in buildings adopted broadly across the u.S. can “yield gross energy savings worth more than $1.2 trillion, well above the $520 billion needed through 2020 for upfront investment in efficiency measures.”1

Advantages Offered by Energy Service Companies (ESCOs)eSCos offer a way to address several of the challenges behind the effort to improve the efficiency of an existing building, most notably difficulty in acquiring financing for the initial investment.

an eSCo’s core business of providing the design, construction and financing for energy-efficient upgrades of a building, as well as assistance in the maintenance and operations of key systems, helps an owner to enter into such a project with minimal risk.

in return for their investment, the energy Saving Performance Contract (eSPC) between the eSCo and the building owner calls for a percentage of the savings achieved by the upgrade to be delivered to the eSCo over the length of the contract. after that point, the owner reaps the full benefits of the energy savings.

Obstacles to ESCO Adoption for Commercial Real Estatedespite the fact that eSCos have been offering services since the 1970s, the market has been underrep-resented. one issue is the complexity of a typical eSPC, which often makes it costly to establish, and therefore limiting eSCo involvement to larger scale retrofits in order to achieve an adequate return.2

in addition, eSPCs are typically long contracts, with an average of 10 years but frequently lasting as long as 12–15 years.3 therefore, the majority of eSCo revenue (82%) comes from contracts with public and institutional owners who have large portfolios of buildings and anticipate long-term property ownership. only the largest private ventures easily capitalize on the benefits offered by eSCos.

Commercial real estate, therefore, is still a largely untapped market, in part due to the need for shorter- term contracts because of the ongo-ing process of buying and selling individual properties. Some experts hope to make eSPCs more viable for the commercial real estate markets by creating a simpler contract model that can be more easily applied to multiple buildings, lowering the price threshold—and therefore the mini-mum length—of a typical eSPC.4

the federal government has taken a modified version of this approach by creating super eSPC contracts with multiple eSCos, which allow for

simpler contracts for projects from different agencies.

Current Status and Future Trends for ESCOsthe economic downturn and government response offer both challenges and opportunities for eSCos. one challenge is the difficulty of obtaining financing during the ongoing credit crisis. this could provide an advantage to larger, more well-established eSCos who find it easier to obtain financing.

frost and Sullivan reports that the north american energy management service market earned $20.35 billion in 2008, and they expect the market to double by 2013.5

this growth may mean that when eSCos are involved in the project, product manufacturers will find they need to work with them versus the owner directly in some product-selection and process decisions.

though the recent lowering of energy costs has made the paybacks less dramatic from a financial standpoint, current policy trends may influence opportunities for this market. the obama administration and dedicated funds in the stimulus package are focused on energy-efficient upgrades for existing buildings. furthermore, because of its relatively low level of controversy, energy-efficiency in buildings has become a cornerstone to nearly all climate change policies. as such an eSCo may find a future full of opportunity. ■

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Sidebar: Financing

1 Granade, Hannah Choi, Creyts, Jon, Derkach, Anton, Farese, Philip, nyquist, Scott and Ostrowski, Ken. Unlocking Energy Efficiency in the U.S. Economy. McKinsey Global Energy and Materials. July, 2009. iii.; 2 Ürge-Vorsatz, Diana. An Assessment of Energy Service Companies (ESCOs) Worldwide. Ademe and World Energy Council. March 2007. 33.; 3 Ibid, p 34.; 4 Rahim, Saqib. “Sellling Private Building Owners Energy Retrofits Depends on the Rewards.” The New York Times. August 21, 2009. Retrieved September 1, 2009 from http://www.nytimes.com/cwire/2009/08/21/21climatewire-selling-private-building-owners-energy-retro-53977.html.; 5 Press Release. “Energy Management Services Market to Reach $40 Billion by 2013, Finds Frost and Sullivan.” February 11, 2009. Retrieved from http://www.frost.com/prod/servlet/press-release.pag?docid=158725257.


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8%

One-fifth (21%) of the buildings involved in green retrofit projects were built in the last 15 years. as can be seen at right, there is a large distribution in the age of buildings being greened—it is not confined to older buildings or ones built during a specific time frame. even the most recent buildings are being improved through green practices.

thirteen percent of the buildings involved in green retrofit projects are at least 76 years old. this relatively low incidence may be due to the fact that buildings built before the 1930s frequently incorporate material and design choices that allow the building to be less dependent on mechanical heating and cooling, helping it be more efficient. this trend was reflected in the case study projects that were historic.

Market ProfileData: Age of Buildings Involved in Green Retrofit

there is a wide distribution of the size of retrofit projects by owners, whereas an overwhelming majority (75%) of tenants engage in small green retrofit projects. this is consistent with the roles of these players.

Building owners may retrofit or renovate entire build-■■

ings rather than portions of buildings like tenants.

Age of Green Retrofitted Buildings


■ 76–100 years

■ 61–75 years

■ 46–60 years

■ 31–45 years

■ 16–30 years

■ 1–15 years30%

21%

16%

14%

13%

6%

■ Greater than 1M sq. ft

■ 300,000 sq. ft to under 1M sq. ft

■ 100,000 to under 300,000 sq. ft

■ Under 100,000 sq. ft

■ Don’t Know35%

22%

19%

16%

8%

17%

75%

Building owners are more likely to have large portfo-■■

lios of properties than tenants.

as can be seen on page 8, more owners than tenants ■■

(70% versus 58%) indicate that they green at least 15% of their portfolio/projects.

Size of a Firm’s Green Retrofit Investment

Square Footage of Green Retrofits by Owners


Square Footage of Green Retrofits by Tenants

OWneRS TenanTS

COntInUED


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Market ProfileSize of a Firm’s Green Retrofit Investment COntInUED

■ $10M or more

■ $5M to under $10M

■ $1M to under $5M

■ $500K to under $1M

■ $100K to under $500K

■ $50K to under $100K

■ Don’t Know/Refused

Money Spent by Owners on Overall Green Retrofit Activity


19%16%

11%

8%

5%

14%

27%

OwnersBuilding owners engage in all levels of green retrofit investments. However, large investments could have multiple explanations—an owner could be making rela-tively simple upgrades applied to their whole portfolio, or they could be engaging in significant system and envelope changes in a few large buildings.

given the fact that most owners pay for the renova-tions out of their profits, it is not surprising that almost 60% of those projects cost less than $5 million.

Tenantsunlike owners, who have a relatively even distribution of the amounts they invest, tenant responses suggest they are more likely to tackle a small, inexpensive retro-fit than a more expensive one—consistent with the size of the projects seen on page 12.


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capital expenses versus budgets to cover operating costs. in fact, over 50% of those surveyed identify this as a challenge to doing a green retrofit project (see page 25).

another issue may be that building owners are engaging in retrofit and renovation projects to improve tenant satisfaction, which is difficult to measure. further-more, because benefits may pass directly to tenants in some instances, those owners may choose not to measure the impacts.

the only consistent way that building owners and tenants measure the economic impact of their green retrofit projects is through operating cost and utility expense savings.

the fact that only 32% of owners and 38% of tenants ■■

are capturing this relatively easily measured benefit suggests that business benefits of green retrofits are not commonly being tracked.

Furthermore, the industry still seems challenged by measurement of any sort. nearly one-fifth (19%) of owners and 29% of tenants report that they either do not know how to measure economic savings from green retrofit activites or have not engaged in measurement activities at all.

When asked about whether they measure other business benefits—such as roi, employee absenteeism and carbon footprint reduction—fewer than 10% report doing so.

one likely cause for this lack of measurement is the difficulty created by the separation of accounting for

Measuring Economic Impact

Business BenefitsData:

Measure of Economic Impact



Savings on Operating / Utility Expenses32%

38%

Don’t Know / Haven’t Done It

19%

29%


Sixty-two percent of owners expect to recoup their investment in green retrofits within 10 years, even with modest savings anticipated. this may indicate that owners do not expect substantial additional costs from going green. With only 11% disagreeing with that expec-tation, most owners clearly regard green retrofits as a sound business decision.

this result is particularly important when the less-easily measured benefits of a green retrofit or renovation project—such as tenant satisfaction and increased building values—are considered. design and construction industry professionals and building product manufacturers can capitalize on the owners’ confidence in the payback of energy cost savings to encourage greater investment in green retrofits based on the other benefits that may also accrue.



■ agree

■ Disagree

■ neither agree nor Disagree

27%

11%

62%

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Business BenefitsExpected decrease in Operating Costs COntInUED

Expected Decrease in Operating Costs

despite the lack of measurements, owners and tenants still expect to see significant decreases in operat-ing costs. Yet, how the retrofit cost is shared between owners and tenants and who benefits most from the savings achieved is highly variable based on different lease structures. this may contribute toward the high percentage who do not know what to expect in terms of operating cost decreases.

Decreases in the Next Yearaverage expected decrease in the next 12 year:

OwNeRs: ■■ 8.5%

TeNANTs: ■■ 10.5%

this result is consistent with MHC studies of new green buildings, where building owners expect similar savings. in those studies, owners predict more modest gains than a/e firms or contractors.

Operating Cost Decrease Expected Next Year



Over 10%19%

29%

5–10%27%

29%

Under 5%24%

25%

Don’t Know

30%

17%

Decreases in 10 Yearsaverage expected in the next years:

OwNeRs:■■ 16%

TeNANTs: ■■ 15%

thirty percent of owners do not know the expected impact on operating costs in one year, and 35% don’t know the expected decrease over 10 years. given that only one-third report measuring these decreases, this result is not surprising.

the fact that measuring results is not yet standard prac-tice for green retrofit projects makes case studies in which measurements have been made—like those on pages 40–64 of this report—valuable because they provide owners and tenants with insights from their peers on how to gauge potential benefits.

Operating Cost Decrease Expected in 10 Years



Over 10%37%

37%

5–10%14%

12%

Under 5%14%

17%

Don’t Know

35%

33%

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On average, building owners expect a 6.8% increase in the value of their building over the next three years.

nearly half (43%) of the owners were not sure about building value. that high level of uncertainty is likely influenced by:

the difficulty in measuring the increase in value ■■

related to the retrofit alone.

Great uncertainty about the value of real estate in ■■

general for the next three years.

0% 8% 24% 24% 43%

50%+ 11–49% 5–10% Under 5% Don’t Know

Expected Increase in Building Values from Green Retrofit Improvements

Business Benefits COntInUED

Building Value Increase over Next 3 Years Due to Green Retrofit (owners)


Expected Increase in ROI

Owners47% of owners state that they do not know how to measure their ROI. those who do feel comfortable esti-mating it are expecting major returns. owners on average expect a tremendous 19.2% return.

this result is a striking departure from the results of other studies regarding new green buildings. in the Commercial and Institutional Green Building Smart-Market Report from late 2008, owners of new green buildings only anticipated an 8.1% increase in roi. this difference suggests that green retrofits may offer a unique opportunity to achieve a more significant roi. alternatively, some owners may be basing their estimates on different benchmarks than those they use to measure the value of new buildings.

one possible reason for the expectation of a higher roi is the ability in a retrofit to target specific green improvements with a high expected return. another is the wider range of investment returns available—including increases in efficiency, rent revenue and building value—that may not factor into a new building project.

understanding the different factors that go into roi calculation and market opinion is a strong opportunity area for further investigation.

Tenantstenant respondents are more conservative than building owners when it comes to their expected roi. tenants on average expect a 7.8% return.


Expected Increase in ROI


50%+

5%

4%

11–49%27%

12%

5–10%16%

12%

Under 5%5%

38%

Don’t Know

47%

34%

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there are still mixed opinions about the impact of green retrofit projects on the expected time to lease a space.

27% of owners expect them to lease more quickly.■■

35% expect them to lease at the same rate.■■

33% don’t know what to expect.■■

as green retrofitted spaces become more common, a clearer pattern may emerge about how they compare in leasing rate with traditional spaces.

27% 35% 5% 33%

More At About the Less Don’t Know Quickly Same Rate Quickly

Expected Time to Lease Green Retrofitted Space


Expected Time to Lease Green Retrofitted Space (owners)


3% 11% 5% 41% 40%

50%+ 11–49% 5–10% Under 5% Don’t Know

16% 8% 11% 41% 24%

50%+ 11–49% 5–10% Under 5% Don’t Know

Most owners (60%) expect to be able to charge an increased rent due to the green retrofits, though their esti-mates of those increases are conservative, with a median expected increase of 1%. there are a few outliers with significantly higher estimates of rent increases, which suggests that some commercial owners are seeing a will-ingness to pay in the market. lack of certainty about the real estate market and the nascency of green building also likely contribute to the high percentage of owners who do not know what level of rent increase to expect.

Expected Rent Increase due to Green Retrofits

Expected Increase in Overall Occupancy

the median increase in occupancy expected by respon-dents is 2.5%. However, the mean is skewed by a few respondents expecting large increases, which could be due to the conversion of previously unoccupied space or to shifting a property from Class C to Class a.

three-quarters of the building owners surveyed expect to see occupancy increase due to their green retrofit and renovation activity.


Increase in Overall Occupancy Due to Green Retrofit over Next Year (owners)


Overall Rent Increase Due to Green Retrofit over the Next 3 Years (owners)

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one-third of tenants surveyed say they would pay a premium price for a green retrofitted space—16% even say that they would pay more than 5% in additional rent for the space.

Not surprisingly, 50% of tenants say that they will ■■

not pay more.

However, given the current economic downturn and the reluctance of any firm to pay more for rent than abso-lutely required, the number of tenants who do agree that they would pay more for green retrofitted space suggests there truly is a premium that can occur in the market for green space.

Tenant Willingness to Pay a Premium for Green Retrofits


Rent Premium Tenants Prepared to Pay for Green Retrofitted Space


■ More than 10%

■ 6–10%

■ 1–5%

■ Zero

■ Don’t Know

50%

17%

8%

8%

17%

Ownersowners believe that 60% of the companies leasing space regard green retrofits as at least somewhat important. the level of this opinion provides insight into how much influence owners perceive tenants as having in the market. in this case, 60% are seeing demand in the marketplace.

Tenants tenant responses on the importance of green in their leased space aligns closely with the perceptions owners have about their answers. owners’ relatively strong grasp of overall demand for green by their potential tenant marketplace suggests that greater tenant demand could have a noticeable impact on the size of the green retrofit market.

Importance of Green Retrofitting to

Companies Leasing Space

OWneRS TenanTS

33%

29%

38%30%

30%

40%

■ Important to Very Important

■ Somewhat Important

■ not Important

Importance of Green Retrofit to Leasing Companies (owners)


Importance to Company of Leasing Green Retrofitted Space (tenants)



as owners seek operational cost savings, increased building values and faster returns on investment, they are approaching green retrofit and renovation activity by greening their building portfolios versus a single-building approach.

Advantages to a Portfolio Approachin just one building, research has shown cost savings from energy-efficiency upgrades alone (not including water or other efficient practices) are saving firms money. When firms green their buildings from a broader portfolio viewpoint, their savings multiply dramatically—particularly crucial in a down economy.

Corporations tend to operate a range of buildings that vary in size, usage and energy loads. Case study research conducted by iCf international, a global environmental consulting firm, has shown that evaluating resource consumption trends from an entire portfolio perspective allows owners to assess potential savings and achieve maximum results.1

identifying the most energy-intensive buildings in a portfolio is not necessarily intuitive, as it depends significantly on tenant behavior and operations. Plotting buildings by size and energy usage can help compan-ies target outliers and implement effective portfolio-wide green retrofits. Some of the companies that have experienced success with

green portfolio upgrades include retail grocery company food lion, who achieved 28% annual cost savings through low-cost and no- cost operational upgrades and Starbucks, with $1.5 million saved per year through lighting upgrades and the implementation of a store energy checklist.2

Commitments to Greening Existing Portfoliosthe u.S. green building Coun-cil’s volume Certification program enables companies to achieve leed certification across multiple build-ings. Many large companies—market leaders that can drive future activity at significant levels—have engaged in the program. Some of these firms include commercial real estate ser-vices companies like transwest-ern, Cb richard ellis and Cushman & Wakefield as well as other large commercial building owners, such as Citi, Wachovia, office depot and Kohl’s. uSgbC reports that to date, the pilot program covers 1,700 build-ings and approximately 135 million square feet of building space. Many of these same firms are active part-ners in government voluntary pro-grams—such as energy Star or u.S. department of energy’s Commercial building energy alliances.

according to doug gatlin, vice president, market development for uSgbC, one of the major advantages of volume certification is that it “pro-vides companies with the tools to

integrate leed into new and exist-ing building projects as a standard feature of design, construction and operations [which will]…help stream-line the certification process and…move closer towards the ultimate goal of market transformation.

Role of Operations & MaintenanceWhile commitment to improving buildings through green retrofit and renovation projects is important, simple changes in operations and upgrades in maintenance procedures can maximize energy and water performance. new policies such as green cleaning and environmen-tal procurement programs can lead to healthier workplaces and cata-lyze larger market shifts (similar to the effect the federal government’s policy on recycled content paper had on increasing availability and decreasing costs of this paper in the larger marketplace). it also allows firms that cannot afford renovation activity across their portfolios to reap benefits that will ultimately help improve the environment. as gatlin says, “by improving performance of existing buildings, owners and operators will expe-rience substantial cost savings stemming from a number of sources, including reduced maintenance/repair expenditures, resource consumption through improved efficiency and increased occupant productivity due to high indoor environmental quality.” ■

A Portfolio-Approach to Greening Existing Buildings and Focus on Sustainable Operations and Maintenance Maximizes Benefits of Green Retrofit and Renovation Project

Maximizing Business Benefits

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Sidebar: Business Benefits

1, 2 Anderson, Don. “Green Operations: An Overlooked Opportunity in Existing Guildings,” Presentation made at the 2009 China Green Building and Energy Efficiency Conference, August 19, 2009.


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ta these results highlight the influence of the down economy:

LiFecYcLe cOsTs: ■■ Some owners reap the financial benefits directly because they have set up fixed utility rates in leases. Others will pass benefits along to tenants but can still market their properties based on reduced energy costs, potentially allowing for higher rents and faster turnaround when leasing.

ROi: ■■ In an economic downturn, cost savings are particularly critical to achieving a higher return on investment.

TeNANT sATisFAcTiON: ■■ tenant satisfaction may carry particular weight given the current economic downturn. Even in a strong leasing market, keeping tenants is more cost-effective than seeking new ones, so it is not surprising that tenant satisfaction is selected by a significant percentage of owners as an important driver for engaging in green retrofit and renovation activities. as vacancy rates continue to grow in the office sector in the second quarter of 2009, retaining existing tenants becomes even more critical.

the high level (60%) of owners who expect improved tenant satisfaction also speaks to trends documented in the The Green Home Consumer SmartMarket Report and The Green Home Builder SmartMarket Report. MHC research demonstrates that green building practices are associated with higher quality buildings, which could account for the strong connection indicated by building owners between tenant satisfaction and green practices.

While tenant satisfaction and direct financial payback are clearly the primary drivers for building owners to engage in green retrofit projects, many owners also indicate that attracting new tenants to their spaces is an important driver for engaging in green efforts. Most of the other factors measured—such as improved rental speed (44%) and the competitive advantage offered by a green building (39%)—provide insight into owner estimation of tenant demand for green. the level of response for these factors suggests that tenant demand can function as a driver for the green retrofit market, but that the majority of owners do not perceive a strong demand to date.

tenants and owners agree that lowering operating/ lifecycle building costs is the prime motivation for engaging in a green retrofit project. this result is con-sistent with other studies conducted by Mcgraw-Hill Construction on the green building market, in particu-lar the Commercial and Institutional Green Building SmartMarket Report, in which the same percentage of respondents (76%) report lifecycle costs an important business motivator for new green building.

Ownersdirect financial benefits of the retrofit itself, not the expected desirability of the space to tenants, are the biggest business motivates for building owners to engage in a green retrofit project.

76% cite lowering building lifecycle costs.■■

64% cite higher ROI.■■

60% cite improved tenant satisfaction.■■

Market IntelligenceData: Business Motivations for Green Retrofits

Green Retrofit Business Motivation (owners)


Lowering Building Lifecycle Costs

76%

Higher ROI

64%

Improved Tenant Satisfaction

60%

Improved Rental Speed

44%

Higher Building / Asset Values

43%

Anticipate an Increase in Demand For Green Commercial Buildings

41%

Competitive Advantage Offered by Green Building

39%

Higher Lease Rates / Higher Rents

35%COntInUED

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Market IntelligenceBusiness Motivations for Green Retrofits COntInUED

Tenantsthe greatest business motivation for tenants is lowering operating costs, followed by improved employee satisfaction.

Productivity gains were noted by almost half (48%) as another important business motive behind green retrofits. in commercial ventures, workers’ salaries are the largest corporate expense. according to the building owner and Managers association and the electric Power research institute, office workers’ salaries are 83.4% of total annual commercial expenditures.

While productivity gains offer the largest potential for monetary paybacks, most types of work output are not easily measured. therefore, these gains are infrequently tracked, especially with new green build-ings. one study from australia on productivity in a green law office revealed a 39% reduction in average sick leave days, a 44% reduction in the monthly average cost of sick leave and a 7% increase in lawyers’ billing rates.

as the green retrofit market increases, more exact understanding of the impact of green building on employee productivity may be gained. Case studies on pages 40–64 offer some insight into these soft benefits.

Lowering Space’s Yearly Operating Costs

96%

Improved Employee Satisfaction

71%

Improved Productivity / Reduced Sick Days Among Employees

48%

Competitive Advantage by Offering a Green Building

38%

Green Retrofit Business Motivation (tenants)


the most important environmental motives are the same for both building owners and tenants.

Eighty-nine percent of owners and nearly all (96%) ■■

tenants cite reduced energy use as the most impor-tant environmental motivation. energy use is easily quantifiable, so reductions can be equated to financial savings without difficulty.

Most owners (87%) and tenants (79%) cite improved ■■

indoor environment/air quality as also important.

the high rate of response for these two factors is consistent with similar findings about environmental motivations behind new green buildings in the Commer-cial and Institutional Green Building SmartMarket Report.

Environmental and Social Motivations


Reduce Energy Use

89%

96%

Improve Indoor Environment / Air Quality

87%

79%

Reduce Water Use

81%

63%

Lower Carbon Footprint

60%

54%

Usage of Rapidly Renewable Materials / Recycled Material / Green Certified Materials

49%

58%

Achieve LEED Certification

47%

29%

Encourage Sustainable Busines Practices 0%

75%

Environmental Motivations for Green Retrofit Projects


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the case study data support these findings. for example, two of the three of u.S. general Services administra-tion (gSa) profiled green retrofit projects (see page 44) were in part motivated by the gSa’s interest in improving indoor air quality for their tenants.

Nearly 80% of owners and tenants most often cite improved health and well-being of building occupants/employees as their top social motivator for going green in retrofit and renovation projects. this finding corre-sponds to the high level of concern about improved indoor environment/air quality as an environmental motivator.

OwnersEconomic concerns are the primary motivation for owners. as shown on page 21, 81% of owners cite reduced water use as an important environmental motivation, making it the third most common environ-mental motivation for owners (behind reduced energy use and improved indoor environment). aside from its environmental benefit, water conservation also provides a direct economic benefit for the owner.

Social motivations for building owners are inspired by a macro-level view of their building in relation to their immediate vicinity and the larger economy:

73% are motivated to support a more sustainable ■■

economy.

57% want to redevelop existing buildings to ■■

improve the overall quality of the built environment in their cities.

the value of real estate is tied to client perception of the building and its environs. among firms who have already committed to green retrofits, therefore, it it consistent that they want to see growth in the overall and perceived value of sustainability.

as early adopters of green retrofit and renovation projects, these owners also frequently cite activities that have a less direct economic benefit but offer marketing potential:

60% aspire to lower their carbon footprint.■■

49% are motivated to use renewable/recycled/ ■■

certified materials.

TenantsWhile the smaller number of respondents makes specific conclusions difficult, there is a clear tendency that tenants are influenced by public perception of their company and the green movement in general.

sOciAL: ■■ 71% want to be seen as being on board with the environment as a cause.

eNviRONmeNTAL:■■ 75% want to encourage sustain-able business practices.

Market IntelligenceEnvironmental and Social Motivations COntInUED


Greater Health and Well-Being of Building Occupants / Employees

78%

79%

Supports a More Sustainable Economy

73%

71%

Lead Redevelopment of Existing Buildings to Improve Overall Quality of City Environs

57%

38%

Seen as Being on Board With an Important Environmental Cause0%

71%

Social Motivations for Green Retrofit Projects



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A s can be seen throughout the market research con-tained in this report, there is a significant portion of

the industry unable to evaluate the full impact of their retrofit and reno-vation project(s). on page 14, a fifth of owners either don’t know how to measure economic impact or they haven’t done it.

achieving the optimal perfor-mance of a project, however, requires good upfront planning, ongoing monitoring and appropriate end-use reporting to demonstrate returns.

However, with the wide array of methods, finding appropriate bench-marks, measures and reporting is complicated. as various indus-try players (including government, nonprofit organizations and trade associations) have pointed out for years, if measures are not evaluated based on appropriate benchmarks and comparable projects, it can make the eventual reported results misleading and not optimal for the ultimate goal of conducting those measures—improving the building performance and yielding financial, environmental and social benefits.

Designing for Performancethe design phase of a project is an ideal time to address different aspects of a green retrofit project, such as selection of products, sys-tems and processes.

integrated project delivery that involves all players in the project has been consistently reported by indus-try leaders and successful green project teams as key to efficient, cost-

effective solutions leading to better quality and higher performing build-ings. in fact, many of the case studies profiled in this report involved teams that engaged with each other from the earliest stages of the project.

virtual tools, such as building information Modeling (biM), facilitate the exchange of information among project team members leading to a better and more-efficient work process. furthermore, simulation models can help estimate a project’s eventual energy performance. the industry is making these connections between biM and green building. in Mcgraw-Hill Construction’s The Business Value of BIM SmartMarket Report released in September 2009, 73% of the entire industry (owners, contractors, architect and engineers) expect use of biM to increase on leed projects—46% believe it will see a high increase.

Setting Effective Bench-marks and Measuresthere are a number of ways that owners are creating benchmarks for the performance of their build-ings, but there is wide variation in how they actually go about that mea-surement. Some forms of measur-ing energy use, tracking utility bills (before versus after or comparable to similar space by building type, size and location), conducting engineer-ing audits and analysis and creating simulations with computer modeling tools (as mentioned above).

finding the right measures is important both for making the internal business case as well as for justifying future projects.

Reporting and Transparencythere are several pressures under-way encouraging—or even requir-ing—public reporting of building performance data, most notably around energy and water use.

one motivator has been the growing trend in legislative policies requiring public reporting of a building’s energy use. though mandates around specific reduction goals hve not been set to date, this trend suggests that policy is moving in that direction. it also indicates that the energy Star program, its Portfolio Manager and doe’s High Performance buildings database will become more widely used and influential in the future.

another market motivator may be the u.S. green building Council’s new building Performance initiative, which includes a comprehensive effort to collect performance data from all leed-certified buildings. Since uSgbC has proved adept at previous market transformation initiatives, it will be notable to track this effort as well as the potential legal implications that might arise as a result.

finally, competitive advantage will also play a significant role—particularly for commercial building owners. in fact, in the new study by Siemens and Mcgraw-Hill Construction, 2009 Greening of Corporate America, 66% of a representive sample of C-suite executives of the largest firms in america report that competitive advantage is driving their corporate sustainability commitments and efforts. ■

Design, Benchmarking, Measurement & Reporting Critical to Achieving Success

Achieving Optimal Performance in Green Retrofit & Renovation Projects

Sidebar: Market Intelligence

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Triggersenergy costs and the desire for high performing/high quality buildings are the two top triggers for green retrofit and renovation activity by building owners.

eNeRGY cOsT iNcReAses:■■ Regarded as a critical trigger by the highest percentage of owners (72%) and tenants (71%).

sUpeRiOR peRFORmANce/qUALiTY: ■■ Regarded as a critical trigger by the second highest percentage of owners (68%) and by a similar percentage of tenants (63%).

these results are consistent with previous green build-ing studies, including those conducted by Mcgraw-Hill Construction, suggesting that the factors that drive green construction are the same whether the project is new or a retrofit.

For industry players—building product manufacturers, design professionals, contractors—who want to encourage owners to engage in green building practices, energy cost increases and the desire for superior performance and quality are highly impactful, whether the proposed project is for a new building or an existing one.

in addition to the strong agreement about energy costs and building performance/quality as critical trig-gers, many other factors in the survey have a heavy impact on the decision of owners and tenants to go green. these include business issues—like competitive advantage, productivity concerns and client demand—as well as government regulations and incentives.

this result demonstrates that a single strategy to increase the green retrofit market is unlikely to succeed as well as a broad, multipronged approach that incorporates government mandates/incentives and market/profitability considerations would. this is also evident in the market because green building is still increasing even though the price of energy has gone down in recent months.

Most Important Triggers to Green Retrofit



Energy Cost Increases

72%

71%

Superior Performance / Quality of Building Space

68%

63%

Existing Government Regulations / Standards

60%

67%

Government Tax Rebates

60%

67%

Competitive Advantage

54%

54%

Increased Education / Awareness of Green Issues

51%

58%

Environmental Conditions that Impact the Construction Industry

49%

48%

Emphasis on Productivity

49%

58%

Client Demand

46%

54%

Anticipated Regulation Related to Climate Change

42%

42%

LEED Standards

38%

46%

Green Retrofit Triggers

Market Intelligence COntInUED

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Challengesfor both owners and tenants, financial concerns are also the biggest challenge to engaging in green retrofit projects.

peRceiveD HiGHeR FiRsT cOsTs: ■■ are the biggest challenge to going green, with 62% of owners and 65% of tenants selecting this as an important challenge.

DiFFicULTies DUe TO AccOUNTiNG issUes:■■ also considered a significant challenge by 53% of owners and 65% of tenants.

these results are consistent with other studies on green building, including MHC’s Commercial and Institutional Building SmartMarket Report. that report demonstrated that, generally, design and construction firms consider perceived higher first costs as a larger challenge than project owners.

Ownersin addition to higher first costs (62%) and different budget accounting (53%), owners also select lower energy prices (49%) as a challenge. this finding reinforces the findings in this study and in other industry research that bottom-line issues significantly impact owners when it comes to green building in any form.

While a segment of the leasing market is seeking green spaces, owners’ responses reinforce that the green tenant market as a whole is still developing.

38% note lack of education and awareness of green ■■

issues as a challenge.

33% report lack of market demand as limiting their ■■

ability to go green. However, it is important to note that more owners (55%) do not perceive this to be an obstacle, compared to just one-third that do. again, this suggests that to date, owners do not believe tenants are driving their green activity.

Tenantstenants are challenged differently than owners are. they perceive a bigger impact in different budget account-ing and green washing concerns. th y are less affected by politics as compared to owners.

DiFFeReNT BUDGeT AccOUNTiNG: ■■ the percent-age of tenants who indicate that different budget accounting is a challenge is as high (65%) as those who select perceived higher first costs. this result may be due to the fact that owners more often engage in construction work as part of their regular course of business than do tenants.

GReeNwAsHiNG: ■■ Even though more tenants indicate that greenwashing is not a significant chal-lenge compared to those that do, it is still notable that significantly more tenants are concerned about this issue as compared to owners. this result is consistent with the fact that tenants may need to rely on owners’ claims about the spaces they lease.


Lack of Education and Awareness of Green Issues

38%

46%

Politics

42%

33%

Lower Energy Prices

49%

39%

Different Budget Accounting Such as Capital Vs. Operating Costs

53%

65%

Higher First Costs

62%

65%

Challenges with the Highest Impact on the Decision to Retrofit Green


Green Retrofit Challenges

Market IntelligenceBusiness Motivations for Green Retrofits COntInUED

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Energy AuditsNearly half the owner respondents (46%) believe that energy audits will be mandatory within five years. this result may be influenced by the fact that all owners interviewed are early green retrofit adopters.

tenants respond similarly to this issue, with 43% agreeing that energy audits will become mandatory.

nearly one-third of owners and tenants are unde-cided about the likelihood of mandatory energy audits.

Job Creationa majority of building owners (54%) and tenants (65%) agree that making buildings more energy-efficient will create new construction jobs. at least half of those who do not agree are ambivalent about it.

these results are consistent with the media’s focus on energy efficiency and renewable energy as the main sources of new construction jobs. green jobs are considered one of the prime benefits of the recent government legislation. for more information green jobs and related investment in preparing the workforce for these jobs, see page 27.

Stimulus Funding and the Energy-Efficiency Marketthe american recovery and reinvestment act (arra) encourages private commercial investment in green retrofit and renovation projects by providing additional funds for two programs administered by the u.S. department of energy—the energy efficiency and Conservation block grants program and the State energy Program.

tenants clearly feel the impact of the stimulus funding more than the owners do, with 70% expecting arra to catalyze the drive for energy efficiency in older buildings, compared to 38% of owners. this differential may be due to the fact that green retrofit and renovation projects undertaken by tenants tend to be smaller and involve fewer activities. therefore, the grants available from federal incentives can cover a larger percentage of their total project cost. further, if owners are viewing green activities as part of their standard business practices, incentives from government would have minimal influence.

attitudes about

Green and Energy-Efficient Policies

■ Agree

■ Neither Agree nor Disagree

■ Disagree

32%

22%

46%

Energy Audits Will Become Mandatory for Commercial Buildings within 5 Years (owners)



AgRee

54%

65%

NeiTheR AgRee NOR DiSAgRee24%

18%

DiSAgRee22%

17%

Making Buildings More Energy Efficient Will Create New Construction Jobs


ARRA Funding Will Catalyze the Drive for Energy Efficiency in Older Buildings



AgRee

38%

70%

NeiTheR AgRee NOR DiSAgRee37%

17%

DiSAgRee25%

13%

Government EffectData:


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ion given the current economic down-

turn, increasing attention is being placed on job opportunities related to a ‘green economy.’

Green Jobs in Constructionalthough no specific, agreed upon definition for green jobs exists, they tend to focus on careers related to energy efficiency and renew-able energy. green jobs are consid-ered professions that lead to greater protection of the environment, decreases in the impacts of climate change and global warming and reduction in energy use.

Several studies point to an increas-ing demand for green jobs related to retrofit and renovation activ-ity in buildings. Most of the esti-mated job opportunites are based on expected changes in building codes and increases in renewable energy demand. employment for green jobs covers both ‘green collar’ workers, such as laborers, HvaC technicians, electricians and carpenters, as well as traditional white collar jobs that support these industries, such as legal and consulting professionals.

New Training Required for Green JobsMany of the green jobs created by a growing green retrofit market will require re-training current construc-tion workers. as a result, a number of different initiatives have emerged.

Community Collegesaccording to a 2009 report released by the national Council for Workforce education and the academy for edu-cation development, community col-leges serve as a beneficial means for green jobs training because they

often have connections to local and regional labor markets and the flexibil-ity to respond to emerging industries.

ApprentiCeshipsapprenticeships, whether offered directly with employers or through labor unions, provide hands-on train-ing for various green job trades. Combining both basic instruction and on-the-job training, appren-ticeships link green-collar workers to actual job sites and increase the opportunity for future employment.

green Job CertifiCAtions non-profit organizations such as the north american board for Certi-fied energy Practitioners (nabCeP) and the building Performance insti-tute (bPi) are offering green job cer-tifications. the nabCeP focuses on renewable energy and energy effi-ciency training with its Solar Photo-voltaic and Solar thermal installer Certifications. bPi’s certification areas include building analyst, air Conditioning and Heating, building envelope and Multifamily.

Local Green Job Trainingbelow are a few examples of the many local green job training programs.

Austin, texAsin June 2009, the austin Chamber of Commerce unveiled its green jobs training program as part of “oppor-tunity austin 2.0”—an economic plan that includes development of green industries. austin will take a multi-pronged approach relying on both the austin Community College and local trade unions (e.g., electricians, plumbers, sheet metal workers) to provide green job training.

CAliforniA on august 31, 2009, California governor Schwarzenegger unveiled the nation’s largest state-sponsored green jobs training program—the Clean energy Workforce training Program. the $75 million in funding comes from grants from the arra, public-private partnerships and other state and local funding.

the program will focus its green job training on unemployed con-struction workers, existing workers who require re-training, low-income wage earners and youths seeking to enter the workforce.

some other progrAmsChicago, IL: Green Corps Chicago ■■

runs one of the oldest green-collar training programs in the country.

Washington, dC: the Green ■■

Jobs advisory Council was set up to help city agencies develop green job training policies.

Wisconsin: the Regional training ■■

Partnership has built relationships to facilitate green job creation.

Trade Unions and Green Jobsin addition to regional and state-wide initiatives, unions are also engaging in green jobs training. two examples:

32BJ Service Employees ■■

International Union (SEIU)’s “One Year, One thousand Supers” green jobs training program.

Laborers Local 55, as part of a ■■

pilot program in Newark, NJ, is reaching out to non-union members to train underemployed and unemployed residents of Newark on green retrofits by the fall of 2009. ■

Green Jobs and Training

Sidebar: Government Effect

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the majority of building owners and tenants believe that targeted financial incentives in the aRRa can affect very specific activities, but they cannot impact the general corporate decision to go green.

the impact of arra on a company’s decision to go green seems to be minimal. only 16% of owners and 17% of tenants report being influenced by arra in their company’s decision to go green. this suggests that the incentives available in arra are not sufficient to convince most companies to embrace overall green policies, even though they welcome the benefits.

for many of the respondents, the decision to embrace green practices was made before the stimulus bill was passed and often for internal cost savings and competitive advantage.

Expectations about aRRa impact on green retrofitting in particular are significant. Sixty-one percent of owners and 74% of tenants agree that arra will impact the green retrofit market overall.

a significant percentage of respondents expect to see arra impact green retrofit and renovation activity in both commercial and government buildings:

owners:■■ 90%

tenAnts: ■■ 71%


Major Role

5%0%

Minor Role

11%

17%

No Role At All

54%

35%

Decided To Go Green Before ARRA Came Into Existence

19%

30%

Am Not Familiar With ARRA

11%

18%

Role of ARRA in Going Green


61% 21% 18%

YeS NO DON’T KNOW

74% 11% 16%TeNANTS

OWNeRS

Will ARRA Affect Green Retrofitting?


Continued

Impact of the American Recovery and Reinvestment Act (ARRA)

Government Effect Continued

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the response to the arra impact on green retrofit and renovation activity supports the larger trend evident in the owner and tenant data in general. government mandates and incentives have an impact on the size of the green building market. However, that market is ultimately driven by the underlying business case for green retrofits.

Owners and tenants consider tax credits and deduc-tions far more effective than loan guarantees. in general, owners’ and tenants’ views correspond on the effective-ness of the three types of government incentives. the expectation that the arra will increase green retrofit and renovation activity corresponds to this finding since the stimulus largely uses tax incentives to encourage invest-ment in high-performance retrofit projects.

tAx Credits: ■■ deemed the most effective overall, they are considered at least moderately effective by:

46% of owners• 57% of tenants•

tAx deduCtions: ■■ 43% of owners and tenants identify them as at least moderately effective.

loAn guArAntees: ■■ Roughly three-quarters of the owners and tenants surveyed indicate that loan guarantees are not effective.

effectiveness of…

…Tax Credits

OWNeRS 54% 14% 32%

TeNANTS 43% 13% 44%

…Tax Deductions

OWNeRS 57% 16% 27%

TeNANTS 57% 39%

…Loan guarantees

OWNeRS 78% 14% 8%

TeNANTS 74% 17% 9%

■ Not effective ■ Moderately effective ■ Very effective

4%

Effectiveness of Government Incentives


Effectiveness of Government Incentives

Government Effect Continued


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ion government actions—including legis-

lation, policy, voluntary programs and financial incentives—have a long history in encouraging green prac-tices in existing buildings.

Government Voluntary Programsthe federal government has several strong voluntary programs that sup-port green building efforts.

the energy Star program (joint u.S. environmental Protection agency (ePa) /u.S. department of energy (doe) program) is widely pop-ular, and it has led to energy reduc-tions in buildings as well as in the appliances, products and equipment located in those buildings. energy Star’s Portfolio Manager is increas-ingly being used by building owners as legislative trends shift toward public reporting of building energy consumption. the ePa also has vol-untary programs around water effi-ciency in buildings (WaterSense) and corporate climate change commit-ments (Climate leaders).

doe initiatives include its high per-formance buildings database, its encouragement of new technology and innovation adoption in order to create marketable net-Zero energy buildings (nZeb), and the Commer-cial building energy alliances, which bring together building owners to create market shifts.

Executive Ordersan effective mechanism for increas-ing green building activity at the federal level has been the use of executive orders.

Clinton administration: Required ■■

federal agencies to implement energy efficiency and water

conservation (2004); also initiated a project to green the White House

Bush administration: Supported ■■

energy and water efficiency in federal facilities (2007)

Obama administration: Issued ■■

an order requiring federal agen-cies to measure, manage and reduce greenhouse gas emissions (2009). Included are specific goals for water efficiency, recycling and waste diversion, and implementa-tion of the 2030 NZEB requirement.

Federal Legislation

the Energy Policy act of 2005: ■■

Provided tax credits for energy effi-ciency and renewable energy in buildings, homes and products.

the Energy Independence act of ■■

2007: Established targets for dOE’s NZEB by investing in education and research in energy efficiency and renewable energy, and also funded energy-efficiency training.

the Emergency Economic ■■

Stabilization act of 2008: Extended the 2005 energy-effi-ciency tax credits to 2013.

the american Recovery and Rein-■■

vestment act (aRRa): Included many provisions encouraging investment in energy-efficiency improvements in buildings, primarily existing ones, with total allocation of approxi-mately $26–$30 billion.

Specific allotments were issued • to a number of federal agencies including the u.S. General Services Administration, doe, department of defense, department of Housing and urban development and department of Veterans

Affairs for hospital and medical facility upgrades. $9.75 billion was dedicated to • schools, but not specifically to construction. However, MHC’s dodge network identifes a number of ARRA-funded education renovation projects as green or energy-efficient, which suggests that some ARRA funds are being directed toward greening existing school buildings.

Climate Change LegislationCongress and the obama administra-tion are working on creating climate change legislation—particularly as the u.S. faces mounting international pressure to do so.

While the u.S. House of represen-tatives passed the american Clean energy and Security act in June 2009, the u.S. Senate version faces challenges both inside and outside Congress.

However, one area of relative agreement for policymakers and industry players is around the energy efficiency of buildings. given this rel-ative support, it is likely that whatever policy emerges will have provisions dedicated specifically to greening existing buildings.

State and Local InitiativesMany state and local initiatives focus on encouraging the greening of exist-ing buildings. fourteen states offer corporate tax incentives for energy efficiency, and others provide loans and other incentives through block grants and state revolving funds. for more information on specific state programs, see the dSire website at www.dsireusa.org. ■

Government Policies Driving Green in Existing Buildings

Sidebar: Government Effect

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33% 61% 6%

YeS NO DON’T KNOW

30%

70%

OWNeRS

TeNANTS

Hired Green Consutant

Source: McGraw-Hill Construction, 2009.about one-third of owners and tenants hired a green consultant on their projects.

among those who did hire a green consultant, the ■■

only required skill reported by a significant percentage of respondents was LEEd knowledge/accreditation.

Since the majority did not hire outside experts, they must either have in-house staff who understand green construction practices and processes or rely on design and construction professionals with sufficient green expertise.

this result demonstrates that, as the green retro-fit market continues to grow, more opportunities will be available for design and construction firms that can provide green expertise. the market has already responded with the continual growth of leed accredited Professionals (aPs) in design and construction firms as well as the u.S. green building Council’s shift to include continuing education credits and practical experience for ongoing accreditation under the leed aP designation.

Use of Green Consultants

Data: Green Retrofit Practices

as early adopters, owner and tenant respondents are committed to greening their projects, with the majority citing engagement in at least four green building activi-ties in a typical retrofit project.

81% of owners engage in four or more green activities ■■

in a typical retrofit or renovation project.

45% of tenants report the same.■■

this result suggests that retrofits and tenant fit-outs involve more than simple quick fixes and easy initiatives like upgrading light bulbs and replacing carpets.

as a result, the green retrofit and renovation market provides significant opportunities for product manufac-turers and green building service providers that offer environmental and performance benefits other than energy efficiency.


Number of Green Retrofit Activities


6 Activities42%

7%

4–5 Activities39%

38%

2–3 Activities16%

38%

1 Activity

3%

17%Continued

Level of Green Retrofit Activities

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Ownersbuilding owners focus on a number of activities that result in financial savings.

all owners (100%) report installing more energy- ■■

efficient lighting or making more use of natural light. because lighting accounts for roughly 37% of the energy use in a commercial building, the potential savings can equal 25–50%. lighting is also relatively inexpensive to replace, so the payback time is minimal.

92% of owners installed energy-efficient mechani-■■

cal and electrical systems. because of the up-front investment these systems require, the fact that such a high percentage engage in this practice reveals a strong commitment to energy savings and a long-term perspective on the advantages of green retrofitting.

71% installed more water-efficient plumbing. ■■

this corresponds with the results of the Water Use in Buildings SmartMarket Report, which reveal that 85% of the industry ranks water use reduc-tion as an important green building practice.

61% upgraded the building envelope. ■■ building enve-lope improvements also offer significant efficiency gains and can lead to strong energy cost savings.

owners also engage in green retrofit activities that lead to greater tenant satisfaction and that may result in long-term tenant retention.

79% engaged in an activity that ■■

improved occupancy comfort.

Increased daylighting has been associated with ■■

increased occupant satisfaction and produc-tivity. Studies demonstrate that natural light increases productivity and improves health and well-being in medical facilities. Studies of schools also reveal the positive effects of natural light on achievement, health and productivity.

Tenantstenants’ activity levels are generally lower than owners’ and their participation in each individual activity reflects that.

activities that more than half of the tenants report engaging in also cover the range of product areas, with most focused on installation of more efficient lighting or increasing daylighting, and in improving employee comfort—both key factors toward employee satisfaction.


Installed More Energy-Efficient Lighting And/Or Made More Use of Natural Daylighting

100%

90%

Installed More Energy-Efficient Mechanical & Electrical Systems92%

52%

Improved Occupancy Comfort Inside the Building79%

66%

Installed More Water-Efficient Plumbing71%

45%

Installed More Environmentally Friendly Finishes & Furnishings66%

52%

Upgraded the Building Envelope61%

21%

Green Retrofit Activities


Types of Green Retrofit Activities

Green Retrofit Practices Continued

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HVaC systems, most lighting improvements (includ-ing occupancy sensors, controls and light shelves), nontoxic cleaners and low-emitting materials are all selected by the majority of respondents as specific materials and systems they use in green retrofit and renovation projects.

Energy-Efficient Mechanical Systemsnearly all owners (91%) and tenants (93%) who installed energy-efficient mechanical and electrical systems included a new HvaC system.

Energy-Efficient Lightingthe majority of building owners installed energy- efficient lighting systems, occupancy sensors and indi-vidual controls.

tenants were very active in all types of improved lighting, with at least 70% involvement in all categories.

Energy-Efficient Mechanical SystemsSource: McGraw-Hill Construction, 2009.


Installed a More Energy-Efficient HvAC System

91%

93%

Installed Heat Recovery Systems that Can Recover Exhaust Air Energy29%

21%

Energy-Efficient LightingSource: McGraw-Hill Construction, 2009.


More Energy-Efficient Lighting Systems

97%

96%

Occupancy Sensors78%

91%

Individual Lighting Controls

73%

70%

Interior Light Shelves and/or Adjustable Blinds 68%

87%

Natural Daylighting Increased

32%

83%

Specific Green Retrofit Systems and Product Types

Continued


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Occupancy Comfortensuring use of nontoxic cleaning products is the most common activity owners are engaging in related to the improvement of occupancy comfort. those improvements that involve construction and have a much more signficiant impact on occupancy comfort, such as installing controls or monitoring systems, are also reported to be used by at least half of the owners surveyed.

tenants appear to be concerned with complying with aSHrae Standard 62 as well.

Other Product Systems and TypesWhile the small number of owners and tenants surveyed who use the remaining green building prac-tices (see page 32 for those percentages) precludes quantitative conclusions. However, some trends can be gleaned from the responses.

wAter-effiCient plumbingthe most popular categories are:

Installing low-flush toilets■■

Installing high-efficiency fixtures■■

environmentAlly-friendly finishes And furnishingsthe most popular categories are:

Low-emitting materials (paints/adhesives/carpets) ■■

are used by nearly all owners and tenants engaged in this activity (see page 32 for overall level of use).

a little more than half used the following:■■

Certified wood• Rapidly renewable materials• Composite wood and agrifiber products that do not • contain urea-formaldehyde resin

upgrAde building envelopethe most popular categories are:

Installing high-performance windows■■

adding insulation■■

Improved Occupancy ComfortSource: McGraw-Hill Construction, 2009.


Established Minimum Indoor Air Quality Standards That Comply with ASHRAE Standard 62

50%

75%

Installed Permanent Monitoring Systems that Provide Feedbackon ventilation System Performance on CO2

57%

33%

Provided Individual Thermal Comfort Controls57%

33%

Ensured Office Cleaners Use Nontoxic Cleaning Products77%

61%

Continued

Green Retrofit PracticesGreen Retrofit Systems and Product types Continued

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Product Brand Awarenessless than half of the respondents are able to name a green building brand for seven out of the nine product categories surveyed. this suggests a broad market opportunity for building product manufacturers to increase their green brand reputation.

two building product categories have a high level of green brand awareness:

building Controls: ■■ 73%

building Comfort (hvAC): ■■ 64%

these results are consistent with the ability of a repre-sentative sample of owners (in the Commercial and Institutional SmartMarket Report) as well as architects and contractors (in two separate surveys—Commercial and Institutional SmartMarket Report and Water Use in Buildings SmartMarket Report ) to also cite a green build-ing product brand. this similarity suggests owners and tenants are actively thinking about green products and not relying only on architect and contractor recommendations.

Ability of Survey Respondents to Name Any Green BrandSource: McGraw-Hill Construction, 2009.

PRODuCT CATegORY

Product Brand with the Highest Awareness

BuiLDiNg CONTROLS

Johnson Controls 20%

Siemens 7%

Honeywell 7%

Trane 7%

Automated Logic 3%

BuiLDiNg COMfORT (hVAC)

Trane 31%

Carrier 7%

fLOORiNg

Shaw 14%

Armstrong 5%

Interface 5%

Mohawk 3%

PLuMBiNg (TOiLeTS & SiNKS)

Kohler 12%

Toto 10%

Sloan 5%

Polar 5%

DOORS & WiNDOWS

Pella 9%

Andersen 7%

Stanley 3%

fuRNiShiNgSHerman Miller 10%

Steelcase 7%

fiNiSheS

Sherwin Williams 9%

The Home Depot 5%

Benjamin Moore 5%

WOODS & PLASTiCS

Weyerhaeuser 9%

Georgia-Pacific 5%

Formica 3%

TheRMAL & MOiSTuRe PROTeCTiON

Owens Corning 7%

CertainTeed 3%

Top-Of-Mind Brands Mentioned by More than One Respondent


Building Controls

73%

Building Comfort (HvAC)

64%

Flooring

49%

Plumbing

47%

Doors & Windows

42%

Furnishings

41%

Finishes

37%

Woods & Plastics

29%

Thermal & Moisture Protection

25%

Green Building Products


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Use of Green Certification SystemsOnly a few owner (16%) and tenant (13%) respondents currently use a green certification program for their green retrofit and renovation project(s). When these respondents were asked which certification program they use, the most commonly cited are leed and energy Star. the unprompted responses reveal confusion about the distinction between green building and energy efficiency in general, as well as confusion about certification versus benchmarking the performance of a specific aspect of green building (e.g. energy), such as that provided by energy Star Portfolio Manager.

Use of Energy Star Scoringto date, the percentage of owners who have used Portfolio Manager to calculate the energy Star score for their buildings is very low, at just 8%. However, that percentage more than doubles to nearly one-fifth (19%) after completion of a green retrofit project.

the relatively low use of energy Star Portfolio Manager is consistent with the fact that less than one-third of building owners are engaging in any level of measuring performance of their buildings (see page 14).

Future Implicationsalready in Washington, d.C., and California, building owners are being required to report their building’s energy consumption. these policies reflect a legisla-tive trend toward requiring more public reporting and transparency around building energy consumption and emissions. this required reporting suggests a future legislative trend benchmarks and emission reduction goals, since these are only possible with measurement systems and reporting mechanisms already in place.

owners that recognize this coming trend and start to engage in setting performance goals and establishing measurement systems will be well-positioned to meet future legislative requirements as well as to gain competitive advantage.

the new leed 2009 standards will also impact measurement of basic energy and water use. for all leed 2009 projects, the uSgbC is requiring energy and water use data for five years after certification.

Use of Green Certification ProgramsSource: McGraw-Hill Construction, 2009.

OWNeRS 16% 70% 14%

TeNANTS 13% 83%

■ Yes ■ No ■ Don’t Know

4%

Company Has Calculated Energy Star Score using Portfolio Manager


Before Retrofit

8% 86%

After Retrofit

19% 68% 14%

■ Yes ■ No ■ Don’t Know

5%

Data: Performance Ratings & Green Certification


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A fter years of steady growth in the u.S., green retrofitting is beginning to gain visibility in con-

struction markets around the world. in recent years, construction in rapidly growing emerging markets such as the uae, india and China has been focused on highly visible, large-scale projects breaking boundaries in scale, iconic design and height. However, in the wake of the global financial crisis, and as these coun-tries face increasing global pressure to make carbon emission reductions, they are beginning to look at existing building stock for dramatic savings in natural and financial resources.

China provides an interesting model of the potential impact of and obstacles to widespread improvement to the efficiency of existing buildings.

Green Building Growing in Chinain China, signs of a growing commit-ment to energy efficiency indicate a steady and significant shift toward green design and construction. green building standards—including the country’s own three-Star label and an increasing presence of leed-reg-istered projects (uSgbC cites 265 as of august 2009)—and the creation of a China green building Council in March 2009 indicate further changes in this carbon-heavy economy.

Government Enforcement Required to Green Existing Buildings despite the increased presence of green building practices in new

construction, industry players are looking to the Chinese government to tackle the issue of greening their existing building stock. in 2006, the Chinese Ministry of Construction announced energy efficiency targets through 2010 that called for 50% improvement and use of renewable energy in 25% of new buildings, as well as a range of targets for improved efficiency in existing and public buildings. However, mea-suring the success of these targets is complicated by the scattering of enforcement responsibilities across regional and local construction administration departments.

Moving forward, more consistency and stringency in the implementation of energy policies will be needed to ensure measurable results. “there is significant potential for China’s building sector,” Kevin Mo, senior sustainable building specialist at the natural resources defense Council, said in august at Mcgraw-Hill Construction’s third annual China green building and energy efficiency Conference in Shanghai. “if all our buildings com-plied with current energy standards, it would have a tremendous impact.”

Potential for Growth in Chinese Green BuildingsWith an estimated 44 billion square meters of existing buildings—pro-jected to contribute 30% to the coun-try’s total energy consumption in the coming years—China’s market opportunity for green retrofitting is tremendous. a range of obstacles exist including a lack of education about the potential savings from

small upgrades—generally preferred among owners—and China’s energy-efficiency standards for existing buildings thar are currently optional.

despite the setbacks, the market is showing signs of growth. large-scale owners in China, such as Starbucks, nike and Shanghai’s own Jin Mao tower, which recently achieved 20% increased savings through simple operational improvements, are already achieving benefits through portfolio-wide retrofits and upgrades. according to don anderson, vice president at iCf international, “energy prices in China are at or above international levels, so many solutions here will be equally beneficial in terms of cost.”

initiatives such as the u.S.-China Sustainable building Partnership, a program overseen by the u.S. agency for international develop-ment, and other partnership efforts led by the u.S. department of energy are helping create case studies that demonstrate the savings potential of green upgrades for buildings in China. Product manufacturers are also contributing to awareness through their own educational efforts, such as classroom educa-tional programs about green lighting run by Philips lighting.

However, the real boost in activity will require buy-in from key owners and stakeholders. “if we just continue with the current renovation rate, it’s going to take decades to really make a major impact,” says olivier Piccolin, senior vice president and chief commercial officer for Philips lighting Commercial asia. “it’s just not sustainable.” ■

China Slowly Turns to Existing Buildings for Savings Opportunities

Green Retrofitting in the Global Marketplace

Sidebar: Market Intelligence

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Methodology:

Case Studiesthe 19 profiled case studies were compiled using a number of sources, including the uSgbC leed Certified Project list, editors at GreenSource magazine, recommendations of sponsors and partners and input from other MHC subject-matter experts. decisions were made independently by MHC SmartMarket editorial staff based on geographic location, building type and quanti-tative results. all interviews were conducted by MHC staff. as a mini-mum requirement, every case study building had to have actual energy reduction and water reductions, with documentation for verification. in nearly all cases, projects were com-pared against their previous space. Where not applicable, comparative benchmarks were applied. MHC cor-roborated data with various sources.

Categories of case studies:

Age of Building that Was ■■

Retrofitted/Renovated: 11 built prior to 1950 with • several on the National Register of Historic Places.8 built after 1950.•

Multi-Tenant and Owner-Occupied ■■

Buildings:Solely owner occupied: 11• Buildings with multiple tenants: 6• Tenant fit-outs: 2•

Building Types:■■

Office: 12• Other (e.g. restaurant, theater, • courthouse, childcare, school, manufacturing): 7

Level of Investment: ■■

Half $1 million and $5 million. • 25% below $1 million.• 25% over $5 million•

Research Datathe survey research focused on the extent of green retrofit tenant improvements or renovations of existing commercial buildings across the u.S. from the perspective of both building owners and tenants. the study was conducted from May 20 to June 12, 2009.

a representative nationwide sample of 738 existing office and retail commercial buildings, with square footage ranging from 5,000 sq. ft. to in excess of 200,000 sq. ft was provided by Cb richard ellis. the sample was composed up of both building owners and tenants who leased space in the buildings. there were no instances where both the owner and the tenants of the same building were interviewed.

a total of 61 completes were achieved dispersed geographically across the u.S. this total sample size benchmarks at a 90% confidence interval with a margin of error of +/-10%. findings where the n was less than 15 are considered qualitative in nature and point to trends in the write-up versus any representative statement.

for the purposes of this study, a “green retrofit” was defined as the addition (or replacement) of new green technology or features to an older existing building that has the net effect of reducing the building’s impact on the environment. in order to qualify as a “green retrofit,” the following screening criteria had to be met:

Own or rent space in a commer-■■

cial office or retail store building which was at least five years old.

Have already completed or plan to ■■

complete at least two activities in

each of the following categories (which map against the U.S. Green Building Council (USGBC) LEED for Existing Building: Operations and Maintenance):

Installed more environmentally-• friendly finishes and furnishings (e.g., laid new flooring made from rapidly renewable materials; installed interior composite wood containing no added urea-formaldehyde resins; used low-emitting interior paints/coatings/adhesives/sealants; used FSC-certified wood)Installed more energy-efficient • mechanical and electrical systems (e.g., more energy-efficient HVAC system; geothermal heating and cooling system; electrical power from a green energy provider)Installed more water-efficient • plumbing (e.g., low-flush toilets; recycled rain or wastewater for toilet flushing)Installed more energy-efficient • lighting and/or made more use of natural daylighting (e.g., LED lighting; individual lighting controls; increased use of natural daylighting)Improved occupant comfort inside • the building (e.g., better internal air quality; occupancy sensors)Upgraded the building envelope • (e.g., installed a green/vegetated roof system; installed low- emissivity energy films on win-dows; replaced exterior hinged doors with revolving doors; added insulation between the interior and exterior walls)

Committed to spending at ■■

least $50,000 on retrofit tenant improvements or renovations.

Green Retrofit Study Research

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case studies

40 Center for neighborhood technology, CHiCago, il

42 Carriage House Child Care Center, PittSburgH, Pa

43 thought leader Perspective: Bob Peck, GSA

44 U.S. General Services Administration (GSA)

Howard M. Metzenbaum united States Courthouse, oH

John J. duncan federal building, tn

u.S. Custom House, Portland, Me

46 100 Montgomery office building, San franCiSCo, Ca

48 idea Center at PlayhouseSquare, Cleveland, oH

49 Scowcroft building, ogden, ut

50 iconic green retrofit: Empire State Building 51 Skanksa nY Headquarters,

eMPire State building, neW YorK, nY

52 Soflo office Studios, San antonio, tX

53 founding farmers, WaSHington, dC

54 thought leader Perspective: Adrian Smith & Gordon Gill on the Green Retrofit Marketplace & Upgrading the Historic Willis Tower

56 Merchandise Mart building, CHiCago, il

58 armstrong Headquarters building, lanCaSter, Pa

59 one Harvard Circle, Suffolk Construction Southeast Headquarters, WeSt PalM beaCH, fl

60 national life office building, MontPelier, vt

61 Mountain gear Headquarters and Warehouse, SPoKane, Wa

62 loyola elementary School, loS altoS, Ca

63 200 Market office building, Portland, or

64 PepsiCo Headquarters building, CHiCago, il

Results AchievedWhile each project featured resulted in water and/or energy savings, either as compared to previous facilities or as com-pared to standard buildings of its type, there is no clear pattern in the savings achieved. energy savings range from 10% to 59%, and water savings range from 22% to 79%.

However, with respect to expected payback on investment, a clearer trend emerges. almost all of the projects calculating

expect to achieve it in 5 years or less.

Key Trends Revealed by the Case StudiesRetrofit Today Versus the PastProjects that were conducted within the last few years explicitly state that greening posed no particular problems. However, those that conducted projects earlier reported significant challenges asso-ciated with making their projects green. Many of the project managers on the more recent green retrofit projects feel that making their projects green was just “common sense.”

Achieving ResultsWhile a few of the green retrofit projects do feature renewable or cutting-edge technology, a significant number report that their best results were achieved from common, off-the-shelf technologies like insulation. a consistent focus on achieving energy efficiency may account for this trend.

Multi-Tenant Buildingsin multi-tenant buildings, engag-ing tenants is critical to achieving maximum building performance

With only a few minor excep-tions, tenants embrace the idea of going green. even where there was initial resistance to issues like recycling and waterless uri-nals, every case study reported eventual tenant support.

Owner-Occupied BuildingsMost owners of buildings that are solely owner-occupied place more emphasis on budget-ary concerns than do owners of tenant or multi-tenant build-ings (with the exception of the multi-tenant owners who are also non-profit organizations). Market-ing strategies aimed at this group should emphasize cost competi-tive green products and services.

LEED EBOM Versus Other LEED Rating Systemsleed eboM differs from other leed rating systems in that par-ticipants consider greening the building to be a process rather than a single activity. No strong distinctions were made between process improvements and small renovations when achieving LEED EBOM certification was the focus of the project.

Greening Historical BuildingsHistorical buildings present spe-cific challenges and certification problems that restrict the green possibilities that can be pursued, but they also offer strong poten-tial for greening. Many owners report “recovering” the original performance of the building.

Introduction:

Case Studies in this Report:

payback

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Motivation to Green

Before green building retro-fits entered the common industry vernacular, the Center for neighborhood

technology (Cnt) had already pur-chased a former 1920’s weaving factory and, in 1989, turned the upper two floors into a workable office space through an energy-efficient retrofit. by 2000, this 31-year old non-profit organization dedicated to livable and sustainable communities had outgrown its space and decided to retrofit the entire building.

Working within a tight budget, Cnt’s office building became only the second leed Platinum build-ing in Chicago. as nicole gotthelf, director of development and commu-nications, put it, “We wanted to show that a non-profit could do this [green retrofit] with very little bells and whistles …. We got people involved in a way that they didn’t even think about being green at the time.”

the three primary goals for the project included:

■ Achieving LEED Platinum at a cost comparable to conventional rehab.

■ Prioritizing energy efficiency.

■ Serving as a demonstration project for others.

in addition to the primary motiva-tions, Cnt’s ultimate goal was to implement sustainable practices as an ongoing process. “Constructing to leed Platinum was a natural choice given Cnt’s longstanding commitment to sustainable development,” says Kathy tholin, Ceo. “but our job is far from com-plete. now that we’re utilizing the space, sustainability means focusing on ongoing operations and maintenance. We’re striving for continuous improvement.”

Achieving Green Within a Basic BudgetWhen asked about Cnt’s green renovation, Stephanie folk, the com-munications and marketing manager at Cnt energy, comments, “one of the most unique aspects about the project is that it was accomplished on a budget similar to that of a standard retrofit. We came up with a variety of creative ways to keep costs down in a leed Platinum building.” these included, but were not limited to: patchwork carpet of recyclable tiles that can be removed/added one tile at a time (as opposed to one consistent carpet scheme); a conference table made out of reclaimed marble from old bathroom dividers from a local school; and wood from fir tree beer barrels used to construct the stairway.

With building costs at $82/sq.ft., Cnt aimed to balance its goals of keeping costs low and maximizing energy efficiency. to achieve this, Cnt used “state of the shelf”

Keeping Green Building Affordable—Platinum Certification on a BudgetChiCago, iL

Center for Neighborhood Technology

continued

stats

Scope of ProjectMajor building renovationProject TypeofficeOriginal Building Age1920sLEED Ratingleed-nC PlatinumLocationChicago, il (urban)Project Start/End2000/2003

PlayersOwnerCenter for neighborhood technologyContractorPhoenix buildersDesigner/architectJonathan boyer, farr associatesConsulting Engineers

eMe Consult- ■

ing engineers Cxa, leed aP ■

J.t. Katrakis & ■

associates

Center for Neighborhood Technology, Chicago, IL

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technologies and quality construc-tion practices to focus on the energy effi ciency basics—tight envelope, high insulation levels and high effi ciency systems. these practices paid off for Cnt and resulted in energy costs of only $1.29/sq.ft.—a 46% reduction in energy use (average for 2005–2007) compared to that of a conventional building.

Overcoming Challenges: Available Experiencein order to achieve these cost sav-ings, various challenges arose, and overcoming them was especially important to Cnt as an early adopter of leed back in 2000. rachel Scheu, green building research Coordina-tor Cnt energy, says, “there were not a lot of contractors in place at the time who had experience in this green arena. there just wasn’t the knowledge base that there is now on sourcing local materials and recy-clable materials, etc.” in order to overcome this obstacle, the project team worked hard to source appropri-ate materials, products and processes to meet the “new” leed standards.

An Ongoing Processin keeping with Cnt’s mission to make sustainability practices an on-going process, Cnt uses two tools to track performance—ePa’s Portfolio Manager and a web-based tool devel-oped in-house. these tools help cal-culate and display the energy use, carbon emissions, water use and transportation energy impacts of the building. Scheu comments, “this building is going to be here for a long life span and it’s our job to make the building last. even though the use and the occupancy may change over time, this retrofi t process continues.” ■

Center for neighborhood TechnologyChiCago iL

continued

Size of Building/Size of Renovation14,961 sq.ft. (3 stories)Project Cost$1,200,000 ($82/sq.ft.)Percentage of Project Cost Attributed to Green

before incentives: ■

11.5% ($137,791) after grants and incentives: ■

7% ($85,000)Annual Purchased Energy (avg. ‘05-’08)841,000 kbtu ($19,314)(56 kbtu/sq.ft., 10.34 kWh/sq.ft.)Annual Water Use (avg. ‘05-’08)101,600 gallons (6.79 gallons/sq.ft.)

Energy, Water & ResourceSavings and PaybacksEnergy Savings (actual)

$18,000/year (avg. ‘05-’08) ■

46% savings compared to if built ■

‘just to code’Percent Water Use Savings (actual, before versus after)30%Materials31% materials and products manufactured within 500 miles, of which 78% was extracted regionally

Additional Business Benefi tsRent & Occupancy100% occupancy with waiting listHigher rents (not specifi ed)

Other Benefi tsOccupancy ComfortGreater than 50% satisfaction in 25 of 26 categories, which included air quality, lighting, temperature, acoustics (survey conducted 2007)

Products and ProcessesGreen Products & TechnologiesPhotovoltaic Panels; thermal ice chiller system; low- and no-voC paints, adhesives, fi nishes and carpet-ing; ventilation auto controls; 7.07% of the total value of the materials in the project comprised of post-consumer content; 12.27% of the total value of materials comprised of post-industrial recycled content; low-fl ow showers, toilets and faucets Green Process improvements

raingarden and native garden that ■

absorb stormwater interactive, web-based monitoring ■

tool that displays ongoing perfor-mance data for energy use, carbon emissions, water consumption and transportation energy intensity daily commute mode entries on ■

employee time sheets: 83% report using alternative transportation

results

Center for Neighborhood Technology, Chicago, IL

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Overcoming Unique Chal-lenges of a Child Care Facilitythere are two main challenges facing the Carriage House as a child care facility: water use and waste.

■ Water Use: the new national association for the education of Young Children standards for hand washing issued in 2008 require chil-dren to wash their hands any time they change location or activities, which, according to Michel, adds up to 26 times a day. further, water is used in some play activities. in order to reduce this large water volume, they installed water-effi cient fi xtures in bathrooms and on hoses, lowering costs by one third. additional bene-fi ts were gained by changing water play time and other procedures.

■ Diapers in Waste & Paper Towels in Bathrooms: unique to a child care facility is continual diaper waste, which has limited recylca-bility. despite this, Carriage House was able to institute a successful recycling program and to adopt sus-tainable purchasing policies. the result: 60% reduction in waste. ■

Motivation to Green

A s a non-profi t organization that serves children, two primary motives were behind the

decision to renovate the historical Wightman School building—energy effi ciency to save money and improved health. bob Michel, the building manager explains, “Carriage House’s original mission has always been the health and well-being of the children. the best thing you can do for children is give them a healthy environment.”

The Decision to Certifyin the last phase of their 20 year master plan, which included replacing the boiler and central heating equipment and adding air conditioning to two fl oors, the board decided to pursue leed for existing buildings certifi cation (leed-eb). in the words of the project architect, gary Moshier, “they wanted to set the right example of being green and have that as part of their curriculum for the kids.” to date, no other childcare center has achieved leed-eb certifi cation.

Renovating to Meet Children’s needsPittSBURgh, Pa

Carriage House Child Care Center

stats

Scope of Projecttotal renovation of base-ment and the addition of two out buildingsProject TypeSchool/ChildcareOriginal Building Age1896Project Financingdonations, grants, bank loanLEED Ratingleed-eb gold

LocationPittsburgh, Pa (urban)Project Start/Endapril 2006/october 2007

PlayersOwnerCarriage House Children’s CenterContractorJendoco Construction Corporation inc., elk air Conditioning (HvaC)

Designer/ArchitectMoshier Studio

ConsultantsMechanical, HVAC engineering, commissioningbda engineering, inc.Electrical, LightingCarlins ConsultingStructuralWaterson engineers

Size of Building/Size of Renovation40,000 sq.ft. (3 stories)/9,720 sq.ft.Project Cost$2,200,000Percentage of Project Cost Attributed to Green 9% ($198,000)Expected Payback10 yearsAnnual Purchased Energy 57.82 kbtu per sq./ft.Annual Water Use530,000 gallons

Cost Reduction and PaybacksOperating Cost Savings (actual)$25,000/year Areas of Savings

59% natural gas ■

13% electricity ■

22% water ■

40% in cleaning chemicals ■

Energy Savings (actual)$21,000/yearPercent Energy Savings (before versus after)59% savings in natural gas / 13% savings in electricityWater Savings (actual)$275/year (153,000 gallons/year)Percent Water Use Savings (before versus after)22%

Products and ProcessesGreen Products & TechnologiesShaw Cri approved carpets; PPg low-voC paints; low-voC sealants & adhesives; toto hand-free fau-cets; Kohler waterless urinial; Watt Stopper daylighting system; fSC-certifi ed wood; lochinvar Knight 93% effi cient boiler plant; aaon M2 air handler with energy recov-ery system; Sloan dual fl ush valves on toilets; insinger Commander 1 gallon per rack dishwasher.Green Process improvementsgreen cleaning system; recycling center; overall building operations manual; recycled 95% of construc-tion waste diverted from landfi lls.

results

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Perspective:

How would the GSA character-ize its green retrofit efforts? What specific goals have been targeted as an organization for greening the GSA’s existing building stock? Peck: gSa has been a leader in the green world since the 70s and now we have a once-in-a-lifetime oppor-tunity with our american recov-ery and reinvestment (recovery) act funds to really catapult many of our buildings forward in a significant green and sustainable way.

We were appropriated $5.5 billion under the recovery act to create jobs and convert many of the build-ings into high-performance green facilities and construct new fed-eral buildings, courthouses and land ports of entry that are models of energy efficiency.

We’ll continue to be a leader in the green and sustainable world, and we have a terrific opportunity to be a proving ground for green architecture. these projects will modernize our buildings and save taxpayer dollars by reducing our consumption of energy and water, and increasing our use of clean and renewable sources of energy. through our use of state-of-the-art green technologies, our construction projects are creating jobs in tradi-tional construction sectors and in emerging green industries.

What do you think is the future for green retrofitting for the GSA in particular and government agencies in general? Peck: gSa has recognized for decades the critical importance

of green initiatives. our empha-sis on high performing green build-ings will result in buildings that are better for the environment, better for our tenants and improve workplace productivity.

We want to, and should, employ state-of-the-art technologies to see what works, what doesn’t. and since we have such a big inventory—we own 1,500 buildings—our quantity buys will give us an opportunity to create the market and hopefully drive down costs for everyone else.

i’d say that gSa is driving growth and innovation that will ensure amer-ican leadership in the new energy economy of the future. for green ret-rofitting of government agencies in general, President obama just signed an executive order that mandates that federal agencies become models

of sustainability for the nation. our direction is certainly clear.

Are there any regions around the country that are particularly active (or inactive) compared to others for the GSA when it comes to retrofitting? Peck: gSa has recovery act projects that will touch all 50 states, the district of Columbia, and two u.S. territories. our largest proj-ect is the department of Homeland Security consolidation at the St. eliz-abeth’s campus in Washington, d.C. overall, we selected the best proj-ects for accomplishing our recovery act goals based on two over-arching criteria: the ability of the project to put people back to work quickly, and transforming our buildings into high-performance green buildings. ■

Robert A. Peck,Commissioner, Public buildings Service, u.S. general Services administration (gSa)

Robert A. Peckon GSA’s Commitment to Green Retrofit and the Impact of ARRA Funds

Thought Leader

John J. Duncan Federal Building, Knoxville, TN (left);

Howard M. Metzenbaum United States Courthouse, Cleveland, OH (right)

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GSA

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For decades, gSa—the largest landlord in the United States—has been following an evolving mandate to make its buildings greener and more efficient. gSa’s

portfolio of properties extends from simple office buildings to historically significant structures. Each building presents a unique challenge, whether it is an architectural gem on the National Register of historic Places or a modern office

building engaged in an on-going process of going green.

Leading the Way in Greening Existing Buildings

U.S. General Services Administration (GSA)

Howard M. Metzenbaum United States Courthouse CLEvELaNd, oh

Historic federal courthouses were typically built to be grand and long-lasting. the project manager of the renovation of the Howard M. Metzenbaum Courthouse building, Pam Howe, states that the original architect of that building, arnold bruner, selected materials that he thought “would last 100 years, like marble wainscoting and beautiful millwork and the murals in the courtrooms.”

Howe describes the efforts to green the building—which focused on updating an old HvaC system and improving indoor air quality—as a “common-sense approach.” She describes how she met more resis-tance from her clients about recovering interior historical details than about the green elements of the building.

She cites the green retrofit as a wise investment with a goal of “breath[ing] another 100 years of life into the courthouse.”

U.S. Custom HousePoRtLaNd, ME

Similar concerns about efficiency and air quality drove the installation of a geothermal system for heating and cooling at the Custom House in Portland project. roman Piaskoski, the project manager, asserts that the retrofit of this building in 2001 “ demonstrates the gSa’s sustainable stewardship of public buildings.”

the geothermal system, combined with the recovery of natural ventilation by restoring the original air riser shafts, helped improve the air quality and reduced energy consumption by close to 50%. after 8 years of service, the system has been virtually trouble free. this project allowed the gSa to resolve their efficiency and air qual-ity issues with minimal impact on the historic interior of the building.

as Piaskoski says, this project “serves as a model and a reference [for gSa]. even today, we are talking about it.”

Greening Historic Buildings

John J. Duncan Federal BuildingKNoxviLLE, tN

Modern buildings also present great opportunities for achieving efficiencies, as Johnathan Sitzlar demonstrated with the upgrades to the duncan federal building.

Sitzlar and his team embraced the mandated energy efficiency required in executive order 13123 issued in 1999 (see page 27). When various systems in the building started to fail or operate inefficiently, they consistently considered environmental impacts and efficiencies, along with savings to the tax payers, when making needed upgrades.

unlike the two historic renova-tions, Sitzlar did not have one major renovation or initiative. instead, he and his team worked steadily on one system and on one tenant fit-up at a time to improve the building.

by 2007, the building received an energy Star rating of 95 and won numerous awards for those efforts. gSa is also exceeding the require-ments of e.o. 13123 by 33% through steady improvements.

Sitzlar emphasizes that their mantra for the efforts was to “maximize opportunities as they became available to make good financial sense and be sustainable.”

Greening Modern Buildings

continued

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Howard M. Metzenbaum U.S. Courthouse

Portland U.S. Customhouse

John J. Duncan Federal Building

Original Building Age 1910 1871 1987

LEED Rating leed-nC certified leed-eb certified

Energy Star Score 82 95

Location Cleveland, oH Portland, Me Knoxville, tnProject Start/End Date 2002/2005 2004/2006

Project Type Courthouse/office office office

Size of Project 235,600 sq.ft. (6 stories)25,269 sq.ft. (3 stories) 172,684 sq.ft. (6 stories)

Project Cost $51,000,000 $1,000,000+ $269,000Percentage of Cost Attributed to Green/ Payback Expected 5%/ 3.7 year payback

Annual Energy Use 87 kbtu/sq.ft. 36kbtu/sq.ft.

Annual Water Use 537,000 gallons 2,027,000 gallons

▼ COST REDUCTiOnS & PAyBACKSEnergy Savings (annual) 15%

Water Savings (annual)32.4% reduction

Energy Savings (annual)

50% all energy ■

types 60% reduction ■

in gas 100% elimination ■

of coal 24% ■ more elec-tricity (to cover energy supplies no longer comign from other sources)

Energy Savings (annual)290,000 kWh (baseline of 2,025,000 kWh/year)

Water Savings (annual)400,000 gallons

Other Benefits Employee Satisfaction90%

Employee Satisfaction 93% in 2006, up from 91%Waste 30% diverted from landfill by recycling:

3.75 tons mixed paper ■

1,300 lbs. aluminum ■

12,000 sq.ft. carpet ■

700 lbs. moving boxes ■

▼ PRODUCTS & PROCESSESGreen Products & Technologies

aggressive waste reduc- ■

tion—material reuse, recycled 55% of construc-tion and demolition waste, resource reuse wherever possible

Carbon dioxide monitoring ■

Construction indoor air ■

quality management plan: use of low-emitting materi-als and humidity control

groundwa- ■

ter geothermal system

restored natu- ■

ral ventilation system the build-ing originally contained

Purchase renewable energy ■

new building control system that integrate all com- ■

ponents to operate efficiently energy management system ■

Premium efficiency fills and motors on cooling tower ■

High-efficiency lighting ■

Motion sensors ■

variable frequency drives ■

enhanced metering ■

1/2 gpm aerators ■

low-flow fixtures ■

1400 gallon rainwater catchment system ■

Green Process improvements

green cleaning products ■

recycled janitorial products ■

recycling (aluminum, plastic, paper, cardboard) ■

rubber mulch ■

recycle/reuse carpet ■

Procurement of recycled-content products ■

Construction debris recycling ■

iaQ plan for construction (e.g., dust, voCs) ■

results

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Tenants Are Key to Green ApproachSaN FRaNCiSCo, Ca

100 Montgomery Office Building

Motivation to Green

W hen Hines purchased 100 Montgomery, its market strategy to compete with other

Class a office space in downtown San francisco included upgrading the building and making it green. Kari aycock, the project manager for Hines, explains that Hines chose to do a green retrofit because “it is the smart way to do things, in terms of life-cycle costs, in terms of liability, in terms of responsibility … [the build-ing] is going to last longer and be cheaper for both us and the tenants in the long run.”

tenant satisfaction played a key role in Hines’ decision to focus on “mak[ing] the operation of the build-ing as efficient as possible.” aycock clarifies that increasing building efficiency is the best approach “to keep operating expenses low [and create] appeal in the marketplace in order to retain existing tenants.” that focus on operations led Hines to pursue certification under leed for existing buildings.

Tenant Satisfaction Through Good Air Handlingin order to create a healthy indoor air environment important to tenant satisfaction, both an efficient HvaC system and good air flow balance are critical. “We use a Co2 sensing tech-nology that tells our air-handling units and HvaC when to charge up and bring more fresh air into a space,” aycock explains. He affirms that making sure that “there is fresh air in the space obviously increases the tenants’ enjoyment of the premises.”

in addition, Hines retained the operable windows—a move that aycock believes contributes to the

continued

Scope of Projectrenovation:

exterior ■

Some common areas ■

interiors ■

building system ■

upgradesProject TypeofficeOriginal Building Date1955

Project Financingbank loans, equity, utility rebatesLEED Ratingleed-Ci goldLocationSan francisco, Ca (urban)Project Start/EndJanuary 2006/ august 2009

PlayersOwnerHines/Sterling american Property, inc.Designer/Architectrobert a.M. Stern architectsConsultantretroCom energy Strategies, inc.

100 Montgomery, San Francisco, CA

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SaN FRaNCiSCo Ca

building … was defi nitely a key factor in going with that location.”

Engaging Tenants in GreenHines also believes tenants are an essential part of success. according to Jack beutell, sustainability man-ager for Hines, “it is important to engage the tenants to reduce con-sumption...that is the big picture.”

in order to help facilitate that engagement, Hines sent its ten-ants regular updates throughout the leed certifi cation process through “road to leed” bulletins. according to aycock, the updates were much appreciated: “[tenants] love to know that the money they are investing in rent and operating expenses is...lead-ing to a [higher quality] building.”

Hines also engages tenants through its Hines green offiCe (Hinesgo®), a new program recently instituted across Hines worldwide portfolio. Hinesgo is founded on principles of education and helps ten-ants learn more about sustainable offi ce practices.

building’s rating of 94 in energy Star’s Portfolio Manager. also, as aycock points out, they made the decision to keep the operable win-dows because “people love [them]. You can’t get away from that.”

Achieving LEED EB Helps Tenants Achieve LEED Cithe achievement of leed-eb gold is important to tenants who are seek-ing green certifi cation for their own spaces. in fact, aycock asserts that leed-Ci is very easy for their tenants to achieve. “every prerequisite would be satisfi ed [just by taking space in the building].”

So far, three tenants of 100 Mont-gomery are seeking leed-Ci. greg Cunningham, principal of the envi-ronmental consulting fi rm enovity, cites the “transparency of [Hines’] greening efforts” as extremely help-ful in their own leed-Ci certifi cation. dale Clark, senior vice president of City national bank—another tenant seeking leed-Ci—states, “the green retrofi tting of the 100 Montgomery

continued

Size of Building424,454 sq.ft. (25 stories)Project Cost$30,000,000Expected Payback

energy-related upgrades: ■

2.3 years Water-related upgrades: ■

5.0 years

Cost Reduction and PaybacksAreas of Savings (actual, before vs. after)

13.7% electricity ■

29.5% steam ■

16.1% water ■

Energy Savings (actual) 1.49 kWh per sq.ft. electricity ■

0.2 kbtu per sq.ft. steam ■

Water Savings (actual)$544/year (29.5% gallons per sq.ft./year or 1.01 gallons/sq.ft.)

Other Business Benefi tsRent increases1.4% (to $38,058 from $37,514)

Products and ProcessesGreen Products & Technologies

renewable energy certifi cates ■

and clean power offsets energy effi cient lights and ■

lighting fi xtures low-fl ow restroom fi xtures ■

Shower and bicycle storage ■

facility


green cleaning program (with ■

green-seal cleaning products, microfi ber equipment and HePa fi lter vacuums) building-wide recycling and ■

composting program Hines effi cient operating ■

Standards

results

as beutell points out, “good design and energy-effi cient operations are essential to a sustainable building, but tenants play a big role too.” ■

100 Montgomery, San Francisco, CA

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Making an Historic Building State of the Art on a BudgetCLEvELaNd, oh

Idea Center at PlayhouseSquare

main concern at the beginning of the project was estimating the fi rst costs in relation to the long term benefi ts. However, fi rst costs did not turn out to be a big issue once they got into the project. “Some people were concerned that we were going to spend a lot of money to make tree huggers happy. after the fact, a lot of people said, ‘Wow, this is the right way to go.’”

Green Technology Center Appeals to Tenantsbefore it was donated to Playhous-eSquare, the building was Class C offi ce space with a 90% vacancy rate. einhouse credits the combination of the green qualities of the building and the state of the art technology infrastructure with helping the build-ing to easily attract tenants. “We had a plan to lease up the building that was going to take about four years, and we accomplished that in under two years,” he states. “the building was just that desirable.” ■

Motivation to Green

Amerger of a public tele-vision and a public radio station brought together PlayhouseSquare, an

arts organization, and ideastream, a multi-media nonprofi t. the part-nership led to a transformation of a 1912 building into a technology center featuring cutting-edge digital broadcast studios, a performing arts center and eclectic, technology-oriented companies.

because both partners are non-profi t organizations with restricted budgets, the choice to go green was—as tom einhouse, vice pres-ident of PlayhouseSquare Manage-ment makes clear—fundamentally an economic decision. Specifi cally, he references a directive from some of their funding sources to achieve leed certifi cation. in the end, the project surpassed the minimum requirement and received leed-Ci Silver certifi cation.

First Costs not an Obstaclefinancial considerations deter-mined the green objectives of the project. einhouse identifi es “energy conservation and making the most cost-effective building” as the main goals of the project.

given their tight budget, the

stats

Scope of ProjectCore and shell renova-tion, replacement of all MeP, tenant fi t-outProject Financing

Capital campaign ■

primarily façade easement ■

Historic tax Credits ■

traditional fi nancing ■

LEED Ratingleed-Ci SilverLocationCleveland, oH (urban)Project Start/EndJanuary 2004/august 2005Project Typeoffi ce/education/broadcast arts

PlayersOwnerPlayhouse Square and ideastreamContractorturner ConstructionDesigner/Architect/ConsultantWestlake reed leskosky

Size of Building/Size of Renovation246,000 sq.ft. (7 stories)/90,000 sq.ft.Original Building Age1912Project Cost$17,000,000Percentage of Project Cost Attributed to Green Minimal

Cost Reduction and PaybacksEnergy Savings (actual, before vs. after)

59% electricity reduction from ■

lighting power density 18% electricity savings from ■

energy Star appliances and equipment

Water Savings (actual)1,295,000 gallonsPercent Water Use Savings (before versus after)20%

Other Business Benefi tsimproved Occupancy88% occupancy from 3%


low voC paint ■

environmentally-friendly carpet ■

Systems ■

furniture ■

Windows/glazing ■

t5 lamps ■

energy Star equipment and ■

appliances Water-saving plumbing fi xtures ■

energy Star roof ■

transformers ■

Materials with recycled content ■

regionally-manufactured ■

materials


green housekeeping ■

aggressive recycling ■

Supporting alternative transpor- ■

tation, such as bicycles & rta rider advantage

results“We had a plan to lease

up the building…[in] four years, and we accomplished that in under two.”

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Scowcroft Building Using innovative Solutions to Green A Historic Building

ogdEN, Ut

juxtaposition of being able to accomplish restoring and preserv-ing a historic structure and at the same time making it green, effi -cient and environmentally friendly. this effort required the designers and contractors to be a little more creative and not just apply the tradi-tional standards to the renovation.”

one of these creative methods included a center coring technol-ogy that drives large drills through the walls of the entire length of the building. using a rebar structure and filling it with nuproxy allowed the contractors to keep much of the original building structure intact.

david describes another innovative technology called corn cobbing where, rather than sandblasting the building, corn cobs are sprayed. “this [process] allowed us more control and was a less abrasive approach to remove the charred layers left from the fire but still keep the original woodwork largely intact.”

these creative processes allowed for 75% of the construction waste to be recycled, even though hazardous materials from the fire in the 1970s had to be taken into account. ■

T he Scowcroft building in ogden, ut, originally built in the 1900s, has a unique history that includes fi re

damage, long-term vacancy and a spot on the national register of Historic Places.

Motivation: Preservation and SustainabilityWhen the u.S. general Services association (gSa) approached Cot-tonwood realty Services about the historic site, they combined their two main goals of not only preserving the over 100-year old warehouse, but also completing a green reno-vation while earning a leed Silver certifi cation in the process.

the completed Scowcroft building added to the urban redevelopment of the city of ogden, a once booming railroad town that was largely aban-doned after new industries took root in neighboring cities.

innovative Solutions to Overcome Challengesrachel david, director of sustain-ability at Cooper roberts Simonsen architects, recalls this unique challenge by stating, “it was the

stats

Scope of Projecttotal renovation of his-toric buildingProject Typeoffi ce, rented to gSa (federal government)Original Building Age1906Project Financinggovernment appropria-tions, historic tax creditsLEED Ratingleed-nC Silver

Locationogden, ut (urban)Project Start/End2002/2004

PlayersOwnerCottonwood realty Services, llCContractorJacobsen Construction Company, inc.

Designer/ArchitectCooper roberts Simon-sen architectsdesigner/architectLandscape Architectbrent Morris associatesEngineers

electrical: Spectrum ■

engineers Mechanical: ■ Colvin engineering assoc.

Structural: abS ■

Consulting Civil: reeve & ■

associates

Size of Building133,000 sq.ft. (4 stories)Project Cost$11,442,000Annual Purchased Energy

■ electricity:895,000 kWh ($44,108 or $0.42/sq.ft.) natural gas: ■

4,550,000 btu ($24,963 or $0.24/sq.ft.)

Annual Water Use903,000 gallons (8.63 per sq.ft.)

Cost Reduction and PaybacksPercent Energy Savings (actual, before versus after)20.6%Percent Water Savings (actual, before versus after)23.3%


High effi ciency irrigation sys- ■

tems; indiginous plants new plumbing and low-fl ow ■

fi xtures low-emitting carpet ■

loW-voC paints, adhesives ■

and sealants new electrical ■

new HvaC ■

raised fl oors hiding high- ■

effi ciency heating system, eliminating the need for ducts in the wood-paneled ceiling double-paned windows ■

refl ective roofi ng ■

two atria increasing natural ■

light innovative seismic reinforce ■

Window glazing with a ■

minimum u-value of 0.33 when occupants adjacent to windows Salvaged, local materials ■


Specify recycling recepta- ■

cles that are accessible to the occupants limited parking area to ■

encourage use of alternative transportation

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Applying Modern Upgrades to a Historic iconNEw yoRK, Ny

Empire State Building

iconic GReen RetRofit

the final package is expected to result in a 38% energy usage reduction and $4.4 million per year of annual energy savings. “We actually developed packages that would allow us to reduce energy by up to 60% but the best roi net pres-ent value was the package that we ultimately decided to implement,” says Schneider. “a huge part of our message, and what we were able to prove, is that it’s an incredibly salient investment.”

the first five of the project’s eight measures are currently underway and will be complete by late 2010. these include a window retrofit and insertion of radiated barriers, reaching a total of 6,524

In 1931, against the backdrop of the great depression, the empire State building became the world’s tallest building and

set an inspiring example of what could be achieved in spite of finan-cial constraints. today, over 75 years later and in the midst of another eco-nomic downturn, this global icon is once again on the cutting edge.

“this project is about demonstrat-ing the economic viability of a com-mercially attractive green retrofit,” says dana Schneider, the northeast market lead of sustainability services at Jones lang laSalle.

The Project & Expected BenefitsSchneider and her team are over- seeing a $500 million green upgrade of the 102-story tower in the middle of Manhattan—one of the most energy-intensive locations in the world. Working under the guidance of building owner anthony e. Malkin, Jones lang laSalle is the project manager of a team that includes the rocky Mountain institute, Johnson Controls and the Clinton Climate initiative, who Schneider credits with initiating the concept.

at the heart of the project is the goal to develop a solid, replicable model for financially sound green retrofits. the team worked for a year on creating the model, starting with a thorough energy audit of the build-ing and identification of 60 poten-tial improvement measures. the final package included 17 options deemed most effective for achieving roi. the determination was based on cost per ton of carbon reduction, energy sav-ings and net present value returns.

new windows and radiators. other features include efficient chillers, air handling units for each floor and demand control ventilation based on carbon dioxide sensors.

When the retrofit is complete, the empire State building is expected to achieve an energy Star rating of 90, making it more efficient than 90% of buildings around the country, with a payback period of three years.

Engaging the Tenantdescribing a comprehensive engagement plan aimed at helping tenants optimize energy performance within their space, Schneider says, “this is to be a whole building model that allows us to see far greater results by engaging the tenants as well as the base building.” as part of the education efforts, a pre-built leed Platinum space in the building will serve as a showcase for tenants.

though tenants are not required to achieve leed certification, it is expected their spaces will perform in a way that would enable certifica-tion. in fact, it is a goal incorporated into leasing.

Educationthe educational benefits of the retrofit will extend beyond tenants to reach the 3.8 million annual visi-tors and broader industry through an interactive visitors’ exhibit and online resources.

Schneider hopes that the project will drive further growth in the green retrofit market. “i really hope that this changes the market by showcasing the economic viability of green retro-fitting. it’s a money maker.” ■

interview with Dana Schneider, LEED AP, northeast Market lead, Sustainability Services at Jones lang laSalle

Empire State Building, New York, NY

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Achieving Platinum in an iconic Space EMPiRE StatE BUiLdiNg, NEw yoRK, Ny

Skanska NY Headquarters

he describes achieving a leed plat-inum interior as “almost like going back to the original design.”

Achieving Platinum Through innovative DesignPressler points out some of the inno-vative features that helped them achieve their Platinum certifi cation: “We have a lighting system that is centrally controlled, and all the indi-vidual fi xtures have eco-ballasts.” their lighting control system is not only motion based, but also mea-sures the amount of exterior light available to gain effi ciency.

Measuring Successthe energy savings they achieved since they moved in on november 2008 demonstrate that, on a lifecycle basis, Platinum can be achieved for the same cost as Class a offi ce space. “We’re absolutely getting even more energy savings than we thought we were going to. We’re actually spending less on energy in this space, which is 35% larger than our old space.” in addition, he reports, based on initial surveys of the employees, that they “seem happier, more engaged.” ■

Motivation to Green

For Skanska, being green is second nature. Steve Pressler, area general manager for new York,

says that green is “a core value of the company.” When they selected the 32nd fl oor of the empire State building as their new headquarters in new York, he reports that “we tasked ourselves to make this a leed Platinum space, and our internal goal was to do it for the same cost as a normal, everyday, Class a offi ce space fi t-out in new York City.”

Utilizing the Original Green Design of the Empire State Buildingthe design of the offi ces in the empire State building actually made the proj-ect easier. Pressler affi rms: “the building itself was designed back in 1930 to be green. one of the original design parameters, as an example, is that no corridor wall could be more than 28 feet from the windows, so it relied on natural light to provide most of the illumination. Similarly, the windows—because of that—were oversized. they are operable win-dows, for natural ventilation.” in fact,

stats

Scope of Projecttenant fi t-out for cor-porate offi ce—interior renovationProject Typeoffi ce fi t-outOriginal Building Age1931 (empire State building)Project FinancingCompany profi ts and tenant improvement allowance

LEED Ratingleed-Ci PlatinumLocationnew York, nY (urban)Project Start/EndSeptember 2008/november 2008

PlayersOwner/Contractor (of interior offi ce space)Skanska uSa buildingDesigner/architectCook + fox architects

ConsultantsMechanical, electrical, plumbing Cosentini associatesLightingarup

Size of Project25,000 sq.ft. (32nd fl oor of empire State building)Project Cost$4,600,000Percentage of Project Cost Attributed to Green 4.7% ($216,000)Expected Payback5 yearsAnnual Purchased Energy 144,000 kWhall is purchased green power

Cost Reduction and PaybacksEnergy Savings(actual, audit conducted)$45,300/yearAnnual Percentage Savings

51-53% in kWh ■

(primarily from electricity) third larger than previous ■

space, with less energy useAnnual Water Savings

40% (below energy Policy act) ■

no monetary savings because ■

included in the leaseTotal Paybacks (est.)$ 556,436 over life of lease (15 years)

Products and ProcessesGreen Products & TechnologiesPressurized raised fl oor fed by high-effi ciency air tower units for HvaC system; lutron ecoSystem ballasts lighting system; Maximum daylighting; occupancy motion sensors, motorized; timed window shades; dual fl ush toilets; Water fl ow restricters; Waterless urinals; Hand-sensored faucets; 90% energy Star Compliant; 80% of construction waste recycled; 89% fSC wood, paperstone, cork; low-voC paints, adhesives and fi nishes; 28% of materials manufactured within 500 miles.Green Process improvementsinstallation of sub-meters for electric, steam and chilled water to continually monitor usage; encouragement of alternate transportation; offi ce recycling program; green cleaning program.

results

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Preserving a Hidden Treasure in South FloresSaN aNtoNio, tx

SoFlo Offi ce Studios

architects, says, “We knew that we had a lot of stuff laying around on the prop-erty so rather than going ahead and reinventing the wheel and buying new products, we started asking ourselves, ‘Why can’t we use this for that?’”

this philosophy resulted in court-yards paved with recycled concrete; trellis entrances and shade structures made from steel salvaged fromprevious building alterations; and existing industrial sash windows reused as guardrails.

The Resultby preserving the industrial feel of the building and infusing modern updates, Conrad explains that the most unique aspect is “the rawness of the interior of the space. both of us had the attitude that we didn’t want to hide what was there but to show it off and even celebrate the rustiness of the metals, for instance. We didn’t try to doctor any of that up.” ■

When principals Mickey Conrad and Mike Mcglone became tired of renting offi ce space

in San antonio, tX, the former col-lege classmates formed a limited partnership and purchased a brown-fi eld junkyard property in the South flores (Soflo) neighborhood.

they then transformed the once scrap-fi lled property into a leed for new Construction (nC) Silver certi-fi ed offi ce space, now home to alamo architects and o’neill Conrad oppelt (oCo) architects. Mickey Conrad, principal at oCo architects, com-ments, “one of our goals was to maintain the bohemian spirit that the building had. We saw a lot of aesthetic value in the old stuff that was in this building and not just a bunch of old rusty pipes, panels and windows.”

Sustainable Management of Resources & Wastethe project team embraced this credo and ended up diverting 95% of all con-struction waste from landfi ll disposal and 16% of all materials were derived from salvaged material sources. Mike Mcglone, principal at alamo

stats

Scope of Projecturban infi ll development and historic retrofi tProject Typeoffi ceOriginal Building Age1940sProject FinancingSeven principals formed limited partnership and used loansLEED Ratingleed-nC SilverLocationSan antonio, tX (urban infi ll)

Project Start/Endoctober 2005/february 2007

PlayersOwnerMagnifi cent Soflo Seven llCContractorMalitz Construction CompanyDesigner/Architectalamo architects and o’neill Conrad oppelt architects

Size of Renovation16,600 sq.ft. Project Cost$1,800,000Annual Purchased Energy 47 kbtu per sq./ft.

Cost Reduction and PaybacksAreas of Savings (actual)baseline year of 2005

■ Energy Savings: 19% ■ Water Savings: 30%


6,500 gallon cistern for rainwater ■

and a/c condensate collection low-fl ow plumbing fi xtures ■

Planted native species ■

one-inch window glazing insu- ■

lated with low-emissions coating low-voC paints, coatings and ■

carpets task lamps for occupant ■

controllability timer/controls on lighting to opti- ■

mize energy savings diverted 95% of all construc- ■

tion waste from innovative reuse and material recycling (concrete, steel and clay tile) energyStar appliances ■


recycling facilities (for paper, alu- ■

minum, glass, metal and plastic)

results

“We didn’t want to hide the [rawness of the

interior] but to show it off and celebrate it.”

SoFlo Offi ce Studios, San Antonio, TX

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Founding Farmers Combining Sustainable Agriculture & Greening with Fine Dining

waShiNgtoN, dC

has been a strong part of what has driven the success of the restaurant.”

Creating a Sustainable & Attractive interiorthe inside includes tabletops and chairs made from walnut extracted from nearby Harrisburg, Pa and all of the seating has access to natural daylight and outdoor views.

Holmes says, “one of the most unique aspects of the restaurant is the décor. We had the extra chal-lenge of making sure the recycled materials we used were also aesthet-ically pleasing for a Washington d.C. restaurant.”

Green Practicesfounding farmers installed energy Star appliances for over 80% of all eli-gible appliances, purchased green power credits for over 50% of elec-tricity consumption and recycled or diverted 90% of construction waste.

the restaurant also implemented a four-tiered recycling container system for compostable items, recy-cled items, cooking oil and everything directed to the landfi ll. this created an additional challenge in staff training for sustainable operations. ■

O ffering fresh “farm-to-table” american inspired food and drink, founding farmers set out to be a

profi table restaurant that represent-ed and promoted american family farmers. as a result, it became rec-ognized as the greenest restaurant in Washington, d.C., by earning both green restaurant certifi cation from the green restaurant association and leed-Ci gold certifi cation. the project has combined a philosophy of sustainable agriculture with the values of green buildings.

Christian Holmes, general manager, comments on the challenge of com-bining these attitudes by saying, “We had to educate ourselves not only on what it means to run a sustainable business, but also what it means to run a sustainable restaurant.”

Kenneth langer, president of eMSi—the leed consultant on the project—points to its success: “the popularity of the restaurant has clearly been a function of many factors but for the customer to expe-rience the lighting and the décor, to see the leed certifi cation plaque on the wall and to know that all these [green building] strategies were used

stats

Scope of ProjectCommercial interior fi t-out for new restaurant in an existing buildingProject TypeHospitality (retaurant)Original Building Age2005Project FinancingPrivate investmentLEED Ratingleed-Ci gold

LocationWashington, dC (urban)Project Start/Endoctober 2007/September 2008

PlayersOwnernorth dakota farmers unionContractorforrester Construction

Designer/ArchitectCore architecture + design

ConsultantsLEED ConsultanteMSiLightingMCla, inc.

Size of Project8,500 sq.ft. (2 stories)Project Cost$4,600,000Percentage of Project Cost Attributed to Green 10%Expected Paybackless than 1 year (attributed to increase in sales beyond projections)

Annual Purchased Energy 10 kWh per sq./ft.Annual Water Use192,000 gallons

Cost Reduction and PaybacksOrigins of Savings

60% result from infrastructure ■

effi ciency of utilities 40% due to regulated, consis- ■

tent operational standards (e.g., solid waste recycling, com-posting, oil recycling, green cleaning)

Areas of Savings(actuals not available because new restaurant)

reduced energy costs ■

reduced waste hauling costs ■

reduced water usage ■

fewer sick days ■

improved employee well-being ■

Products and ProcessesGreen Products & Technologiesenergy Star high-effi ciently equipment and appliances in the kitchens; reclaimed and recycled materials for all interior fi nishes such as fl ooring, walls, fabrics, wood furnishings; Post-consumer based content countertops; recy-cled concrete top bars and fl ooring sections; low-voC paints; High effi -ciency water source heat pumps; energy-effi cient lighting design (reduced lighting power density); energy Star food service equipment and dishwashersGreen Process improvementsSustainable procurement policy for iaQ compliant products; green cleaning, Sustainable site main-tenance, recycling program that exceeds uSgbC recycling criteria

results


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ion Adrian Smith, FAIA, RIBA (near left)

founding Partner, adrian Smith + gordon gill architecture

Gordon Gill, AIA (far left) founding Partner, adrian Smith + gordon gill architecture

The renamed Sears Tower, now bearing the name of its new tenants Willis Group Holdings, is preparing for another, much deeper transformation. Chicago-based Adrian Smith+Gordon Gill Architects is the design firm behind the skyscraper’s upcoming green retrofit—which includes measures to reduce energy consumption by 80% as well as plans for a new, 50- story, off-grid sustainable hotel on the site that will operate off energy savings from the renovated Tower.

Adrian Smith and Gordon Gill, founding partners of Smith+Gill and co-designers of the Willis Tower project, spoke recently with MHC’s Catlin O’Shaughnessy about plans for the two buildings and their perspectives on the growing green retrofit marketplace.

In your view, what are the real benefits/opportunities presented by green retrofitting? AdriAn Smith: the main benefit is avoiding the obsolescence of older commercial buildings. green retrofitting of historic or older buildings positions them to be more competitive and attractive to tenants. and, obviously, there’s the potential to save tremendous amounts of energy because, historically, these buildings are inefficient.

What is the key message that needs to get out to owners and the industry about this?

Gordon Gill: the message is that green retrofitting is economically viable and, in many cases, minor in terms of the level of intervention in the buildings. there are certain financial vehicles available to owners and tenants that allow them to offset the costs of retrofitting through governmental aid. tax increment funding is part of it, but in a lot of cities there are also sus-tainable or green funds available to people who are going to implement photovoltaics, for example.

From your experience, what is the owner perspective of green retrofits versus new construction when looking at green buildings? GG: Most owners think it’s easier to integrate green strategies into the design of a new building than they do in retrofits because they have a sum of money for this project and a percent of that is going to go to green initiatives. but in thinking that way, it’s a segment of the project, when in fact it should be everything about the project, a much more holistic approach to the economics and life cycle of the building.AS: a lot of existing buildings today can be looked at as deficits in terms of energy consumption and carbon, but you could reverse that in terms of a financial portfolio, especially for people who have large holdings of existing buildings. it could become a tremendous asset—not just from a real estate standpoint, but from

a carbon and energy standpoint.

Why do you think the benefits and opportunities of green retrofit projects have been overlooked in the past? GG: i think they’ve been overlooked in the past because there simply wasn’t an awareness of the impact of buildings on the environment. i think most people looked at building as simply a consumption of land. People didn’t understand what it meant in terms of carbon, and how it was tied directly to energy consumption. AS: and a lot of that was because we always had very cheap energy and abundant resources. even today, we still think we have abundant re-sources, and to a point—compared to some other countries—we do. but especially as we export our culture, those countries are demanding—especially from architects and urban planners—that we be highly sustain-able. as we’ve begun to understand that, the education about energy in this country has shifted. You can see it from government and corpor-ations to school children. GG: My own children now are very aware of sustainable measures and what it means to save energy, and they’re highly critical of people who don’t.

How might highly visible projects like the Willis Tower impact the green retrofit market? Will they lead to more activity in the future?

Adrian Smith & Gordon Gillon the Green Retrofit Marketplace & Upgrading the Historic Willis Tower

Perspective: Thought Leader

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Adrian Smith & Gordon Gillon the Green Retrofit Marketplace & Upgrading the Historic Willis Tower

continued

AS: i think it will [drive market activity]. this is the tallest building in america. it has the observation deck at the top floor. it has between a million and 2 million people per year coming to the observation deck, so we think the educational component to this is pretty significant. i think we’ll see a lot more green retrofits of iconic structures, especially because of the economic situation around the world. i think you’re going to see people looking to renovate build-ings as opposed to building new—for a while, anyway. and once they see that the renovation can reposition the building more favorably for tenants, it’s going to be even more attractive. and if there’s long-term savings, in terms of energy savings and a return on the investment, that will also be attractive for the owner.

What other sectors might become more active with green retrofitting?GG: the education sector is also going to be key for green retrofits.

universities are going to understand that all their building holdings on campus are going to be able to become a lot more valuable as a result of retrofitting. other institu-tions with large building holdings, such as the gSa, will also be able to take advantage.

Looking ahead, what obstacles or challenges might stand in the way of the growth of this market around the U.S. and in other regions?GG: there are various policy issues there. in the most successful model of green retrofitting, you are able to share energy between buildings. Part of that concept is the ability to offset or shave peak load energy by

sharing energy between office and residential buildings—day use versus night use. but owners need to be willing to share their energy savings, and there needs to be a policy intact that allows them to do that. Policy needs to be adjusted for cities to allow energy to be more fluid, to be shared, for grids to accept energy savings and then return that savings to buildings and building ownersAS: Culture is also an obstacle. right now in the u.S. not everyone under-stands that green retrofitting has tremendous value. everybody thinks it’s a capital cost, [but] that’s not necessarily true. Second, you have to change the culture from thinking about capital costs to thinking about life-cycle costs. our culture tends to be about the immediacy of gain [and this] has to change to a long-term approach to energy savings and the quality of the environment. that’s really the biggest obstacle.

Looking ahead, do you see green retrofitting growing globally? AS: i think it will go global. it has to. if all the projections are accurate, and the 2020 and 2030 goals are to be met, then there’s no choice. You’re not going to get there by changing just the transportation systems. buildings will represent close to 60% of the energy used in our society. You have to address that, and most of the building stock is existing buildings. ■

Perspective: Thought Leader

Willis tower retrofit Project overview

Owner: 233 South WackerDesigner: adrian Smith+gordon gill architectureKey Components: green retrofit and oper-ational upgrade of Willis tower Project Cost: $350 million (expected $50-$75/sq. ft.)

Retrofit Components Window replacement ■

and glazing of tow-er’s 16,000 single pane windows Mechanical system ■

upgrade with new fuel-cell gas boilers

on-site renewable ■

energy to be tested in form of wind turbines and solar hot-water panels High-efficiency chillers ■

and upgraded distribu-tion system efficiency upgrades to ■

104 high-speed eleva-tors and 15 escalators upgrade to water ■

efficient bathroom fixtures Condensation recovery ■

system and water effi-cient landscaping

lighting upgrades ■

Expected Results and Savings

Comprehensive energy ■

savings of up to 80% Heating energy ■

reduced by 60% elevator/escalator ■

energy cut by 40% lighting energy con- ■

sumption cut by 40% Water use reduced ■

by 40% (24 million gallons/year)

“[Large holdings of green existing buildings] could become a tremendous asset—not

just from a real estate standpoint but from a carbon and energy standpoint.”

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Decades of Improvement at a Historic Landmarkchicago, il

Merchandise Mart Building

F or the facilities team at the Chicago Merchandise Mart, green retrofitting is an ongoing process. Con-

structed in 1930 and encompassing four million square feet of wholesale retail showrooms, the building has undergone a thorough trans-formation over the past 20 years to become one of the greenest historic structures in the country.

Translating Efficient Practices into Green Certification“We actually started in 1986 with a complete rehab of the building,” explains Mark bettin, vice president of engineering at Merchandise Mart Properties, inc. (MMPi), referring to extensive renovation through the early 1990s that established the foundation for improved recycling and waste reduction.

following further improvements, including a comprehensive washroom efficiency retrofit and the establishment of performance benchmarks in 2001, the Merchan-dise Mart sought and earned a Silver certification under leed-eb in 2007. “the good news for this facility going into leed was that we had a long history of running our facility effi-ciently,” says Myron Maurer, senior vice president at MMPi. “We never would have been able to achieve leed if it wasn’t for those previous improvements.”

Ongoing ActivitiesSince the completion of the 2007 eb project, which included features both simple (such as eliminating water bottles and switching to recycled content trash can liners) and complex (real-time metering and Co2 sensors and tenant education programs), Maurer and his team have continued the tradition of implementing ongoing improvements.

More recent initiatives include comprehensive lighting upgrades and the replacement of the previous water pumping system with a more efficient alternative after the original

continued

stats

Project FinancingCapital budgetProject Typeretail/office/ShowroomLEED Ratingleed-eb SilverLocationChicago, il (urban)Project Start/EndMost recent: June 2006/ november 2007

PlayersOwnerMerchandise Mart Properties, inc.Consultantdelta instituteThird-Party Auditorenvise

The Merchandise Mart, Chicago, IL©

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The Merchandise Mart, Chicago, IL

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was rendered oversized following effi ciency improvements. looking forward, the next component is a green retrofi t of the Merchandise Mart’s sister building, 350 West Mart Center.

Comprehensively, the years of continuous improvements have paid off in multiple ways. benchmarking data demonstrates signifi cant savings in operating costs, and the building itself enjoys a growing rep-utation as a historic building with

Merchandise Mart Buildingchicago, il

continued

Size of Building4,200,000 sq.ft. (24 stories)Date of Original Building1930

Most Recent Project ResultsProject Costs$440,000PaybackTwo years

Operating Cost ReductionsBaseline Year 2006Auditinternal and two third-partyOperating Cost Savings Leading up to Certifi cation

10% ■

Operating Cost Savings 2007reduced electricity

3% usage reduction (actual) ■

Operating Cost Savings 2008added focus on Pumping Systems and lighting retrofi ts

10% usage reduction (actual) ■

Operating Cost Savings 2009With retrofi ts to lighting fans and Pumps

20% usage reduction (expected) ■

Water SavingsWater Savings (actual, audit conducted)

$300,000 since 2001 ■

(accumulation reduction of 45%)$80,000 in 2008 ■

Water Savings (actual)over 100,000,000 since 2001

Green Products & TechnologiesLighting & Controls

installed energy-effi cient lamps ■

for common area fi xtures and exit lights installed light switch enabled ■

motion sensors in all restrooms installed real-time meters on ■

common area systems including gas, steam, chilled water, domestic water, compressed air and electricity Piloted then expanded use ■

of carbon dioxide sensors on HvaC systems rewrote graphic displays for ■

HvaC systems to focus on energy effi ciency and indoor air quality

Indoor Air Quality used low-voC paints and ■

adhesives Recycling

increased interior and exterior ■

recycling centers Started recycling fl uorescent ■

tubes, cfl ’s, ballasts and batteries

Switched to recycled ■

content trash can liners Switched to paper products ■

with recycled contentOther

replaced and extended ■

permanent walkoff matts eliminated dispensing ■

of disposable water bottles installed 5 gallon water coolers ■

Green OperationsCreated a Green Operations Guideover 20 policies in the following areas:

exterior Maintenance, including ■

policy on drought tolerant landscaping energy Management ■

indoor air Quality ■

Water effi ciency (need to meter/ ■

sub-meter to baseline energy performance) Preventative Maintenance ■

green Cleaning ■

recycling, including creating a ■

second shift supervisor position for the recycling Center equipment Maintenance ■

integrated Pest Management ■

event Planning ■

Purchasing ■

Construction Standards ■

results

a modern twist. the Mart is en-joying an increased fl ow of special interest groups seeking a green venue for industry events, as well as an increased interest and involve-ment from staff.

Attracting Talentthe changes are also resonating with the next generation. “With the age of our building, if we’re not at the cuttingedge and getting in the lead with energy conservation, we’re going to have a tough time attracting talent,” says lloyd davidson, vice presidentand general manager for MMPi. “We’ve found [our green retrofi ts] key not just to attract the right tenants and new companies but also to help us and our tenants attract young talent.” ■

“We’ve found [our green retrofi ts] key not just to attract the right

tenants…but also to help attract young talent.”

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Walking the Talk with an Improved Headquarters laNcaSTER, Pa

Armstrong Headquarters Building

urinals and dual-fl ush toilets, the project team was able to cut back on the building’s water use by discovering a malfunction in the humidifi cation process.

Snader recalls, “one of the big pieces we found during the commissioning phase was that fresh water was basically just going down the drain as part of the humidifi cation process. We were able to identify that and save about 28,000 gallons a month just from that discovery.”

The Ripple Effectattaining leed certifi cation created a ripple effect throughout armstrong. the project team was able to use all of the documentation put into the certifi cation process to create a series of policies and procedures for use on all of the buildings on the armstrong campus and other locations as well. Snader says,

“now a facility person making a decision for carpet or for other materials is going to look at the criteria and make a more sustainable choice than they may have made before we did this project.” ■

Walking the Talk

A s a leader in the green building marketplace, armstrong World industries found itself

without a suitable answer to questions arising from customers regarding whether armstrong had any leed buildings on its campus.

in May of 2007, armstrong was able to respond to customers’ inquiries with the leed for existing buildings (eb) Platinum certifi cation of its company headquarters in lancaster, Pa. as anita Snader, environmental sustainability manager for armstrong, says,

“We really wanted to show to the building industry our commitment to the leed rating system and to sustainable principles. Having a living example of a sustainable building on our corporate campus accomplished that and much more.”

Addressing Waterone of the biggest goals for the retrofi t was to reduce the 126,000 sq.ft. building’s use of water. in addition to installing water sensors on the faucets, waterless

stats

Scope of ProjectMinimal retrofi t upgrade, review of systems, oper-ational improvementsProject Typeoffi ceOriginal Building Age1998Project Financingdonations, grants, bank loanLEED Ratingleed-eb Platinum

Locationlancaster, Pa (suburban)Project Start/End2006/2007

PlayersOwnerarmstrong World industriesContractorSkanska uSa buildingDesigner/Architectgensler

ConsultantsLEED/Greenre:vision architectureEngineer/MEP/Structural/Commissioning Agentbala Consulting engi-neers, inc.Engineer/Civildavid Miller associates

Size of Building Retrofi t126,000 sq.ft. (3 stories)Project Cost$138,000Expected Payback3 yearsAnnual Purchased Energy 1,576,776 kWh/sq.ft.(2,000,000 kWh purchased wind power)Annual Water Use420,000 gallons

Cost Reduction and PaybacksWater Savings (actual)380,000 gallons/yearPercent Water Use Savings (before versus after)48%

Products and ProcessesGreen Products & TechnologiesPPg insulated glass (tinted - argon fi lled - double paned); optima 1” thick acoustical ceiling panels; armstong i-ceilings; optima and ultima ceiling panels; Systems controls using Johnson Controls software; HvaC system with energy-effi cient motors and energy mgmt software zoned into small zones to maximize occupancy comfort; integrated control systems interface with lighting systems using outdoor photocells and timers; Waterless urinals; dual fl ush toilets; low fl ow faucets; no irrigation landscaping; interior and exterior light shelves; energy-effi cient lighting fi xtures with t8 fl ourescent lamps and electronic ballasts; occupancy sensors; armstrong WoodWorks edos walls; armstrong translations fl ooring-green carpetGreen Process Improvements

Sustainable procurement policy ■

for iaQ compliant products green cleaning ■

Sustainable site maintenance ■

recycling program that exceeds ■

uSgbC recycling criteria

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Staying on Budget While Making a Statement WEST PalM BEach, Fl

One Harvard Circle, Suffolk Construction

“it wasn’t just about accumulating leed points.”

Suffolk’s strategy to maximize environmental results within an affordable budget is most easily demonstrated by the choices they made in the energy-effi ciency aspects of their project. Kiziah points out that “the building is obviously fi xed in a certain position so you can’t move it around” when doing energy modeling.

therefore, Suffolk focused on what could be accomplished with available technologies and products. “We have an eifS façade system that is 3 ½ inches thick … [and] offers a lot of thermal insulation value.” in addi-tion, by changing the original black plate glass windows on the exterior of the building to green low-e glass,

Motivation to Green

S uffolk Construction made a corporate commitment to sustainability and green building for all building

projects and offi ce practices. therefore, when they decided to buy an existing building in West Palm beach and renovate it as their Southeast Headquarters, it was a natural decision to renovate the building to be green. for Suffolk to “talk the talk” about sustainability, they felt it was important that they also “walk the walk.” their stated goal: achieve as green a building as possible while keeping within a tight budget for the renovation.

Determining the Practical Level of Greenafter looking at their budget and at the restrictions created by work-ing with an existing building, Suffolk decided to pursue leed certifi cation at the Silver level.

according to Matt Kiziah, the proj-ect manager at Suffolk, choices on appropriate strategies were made to maximize sustainability and results,

stats

Scope of Projectrenovation—exterior facade and interiorProject Typeoffi ceOriginal Building Age1987Project Financingbank loanLEED Ratingleed-nC SilverLocationWest Palm beach, fl (suburban)

Project Start/EndJanuary 2009/november 2009 (near completion)

PlayersOwner1 Harvard Circle, llCContractorSuffolk Construction Company, inc.Designer/ArchitectHanson Professional Services, inc.

ConsultantsEnergy Services Company (ESCo)renewable Choice energyLEED ConsultantPerkins + Willabney & abney green SolutionsLightingSesco

Size of Building/Size of Renovation45,000 sq.ft. (2 stories)/23,000 sq.ft.Project Cost$5,360,000Percentage of Project Cost Attributed to Green 5% ($268,000)Expected Payback5 yearsAnnual Purchased Energy 45.5 kbtu per sq./ft.Annual Water Use96,000 gallons (approximately 8,000/month)

Cost Reduction and PaybacksEnergy Savings (annual)13-15% (based on commissioning)Water Savings (annual)

43% (actual) ■

$4,150 (132,692 gallons) ■


energy-effi cient building ■

envelope energy-effi cent vav HvaC ■

system with increased occupant controls energy-effi cient lighting ■

indirect daylighting ■

recycled content ■

Green Process Improvementsimplemented offi ce-wide recycling program

results

they were able to maximize daylight in the building while minimizing the thermal increase—a critical factor for increasing effi ciency in florida. “You pay a bit of a premium [for the low-e glass], but it defi nitely helps to reduce the sun’s impact on the building,” affi rms Kirby.

the project proved results. as Kiziah points out, “in the end, it makes for a better workplace, and it’s rewarding knowing that it is environ-mentally-friendly as well.” ■

“In the end, it makes for a better workplace,

and it’s rewarding knowing that it

is environmentally-friendly as well.”

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Insuring Longevity in a Green Retrofi tMoNTPEliER, VT

National Life Offi ce Building

tax benefi ts—there was a less than two year payback on that system.” Post-retrofi t, the national life build-ing has reduced water expenses and reduced electrical usage by over $50,000 per year.

as part of their overall goals for reducing their ecological footprint, national life also implemented an alternative transportation program that offers incentives for employees who carpool, use public transporta-tion, walk, bike, or work from home. Well over 20% of the corporation takes advantage of this program.

Continuing Green Retrofi ts in the Futureeven after achieving leed-eb Certifi -cation, Shea knows that there is more that national life group can do on an ongoing basis to constantly improve their footprint and collective envi-ronmental impact. “it’s only going to get better from here,” Shea says. “if technology becomes more acutely attuned to markets, and as incen-tives—whether it is the government’s stimulus, tax credits, local grants, or utilities incentivizing—it’s only going to get better.” ■

T he national life group headquarters in Montpelier, vermont is the oldest and largest building in the state

to receive a leed certifi cation. the national life headquarters, construc-ted in the early 1960s, consists of three separate buildings retrofi tted in 2008. “it started as trying to do the right thing in regards to the envi-ronment,” says tim Shea, Second vice President for facilities and Man-agement at national life, “but most of the things we started to look at made a lot of fi nancial sense as well.”

Implementing Strategy and Assessing Paybacksnational life group buildings now have solar thermal, solar photovol-taic and low-fl ow water fi xtures. “We looked at the cost benefi ts and the environmental impacts of each installation, and the things that we picked were those that we recognized we needed to do with a 50-year-old building, regardless,” says Shea, “so some of them aren’t as aggressive or don’t show as lucrative of paybacks. then others, like the solar installa-tion—due to some grants and the

stats

Scope of ProjectWater and lighting retrofi tProject TypeCommercial offi ceOriginal Building Age1960Project FinancingCompany profi ts LEED Ratingleed-eb SilverLocationMontpelier, vt

(population 8,000, outside Montpelier)Project Start/EndMarch 2008/december 2008

PlayersOwnernl group

ConsultantsElectrical Contractor (Lighting)bates and MurrayEngineering Mechanical ContractorCapital engineeringEnergy Services Company (ESCo)green Mountain Power and effi ciency vermontCommissioning AgentHallam-iCS

Size of Project543,992 sq.ft. (3 separate buildings)Project Cost$2,000,000 Annual Purchased Energy 62 kbtu per sq./ft. (nearly 10,000 mWh)Annual Water Use3,000,000 gallons

Cost Reduction and PaybacksEnergy Savings (annual)(actual, audit conducted)$50,000 (electricity)Water Savings (annual)(actual)$15,000 (1,700,000 gallons)Percent Water Use Savings (before versus after)57%

Other Business Benefi tsBuilding Value Increase$3,000,000 additional value from upgrades


Solar thermal installation ■

Solar photovoltaic ■

installation new low-fl ow water ■

fi xtures new HvaC pumps and ■

motors new cooler with nontoxic ■

freon

Green Process Improvements (new)

indoor air quality procedures ■

Storm water management ■

monitoring Commissioning procedures ■

energy Star monitoring ■

Sustainable procurement ■

requirements Waste management ■

processes

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An Early Leader Provides a Catalyst for Green BuildingSPoKaNE, Wa

Mountain Gear Headquarters and Warehouse

A Catalyst for ChangeHowever, in overcoming the challenge of working with contractors unfamiliar with green practices, Kellogg reports that many of the contractors embraced what they learned and it “has become their practice now.”

the Mountain gear project also provided a great opportunity to pro-mote the value of green retrofi ts for other building owners in that area. Kellogg reports that many people have toured the building because of its green reputation: “People are interested and want to see what has been done and how they could do it.”

Results AchievedMountain gear’s leadership in green building is supported by their impres-sive results. though the new building is fi ve times the size of their previous one, their energy bills are less than double those of their former space. in addition, since their move, employee turnover is 30% lower, absenteeism is down and morale is up. accord-ing to fish, “People are proud of the place they work and being part of a company that has gone above and beyond” to be sustainable. ■

Motivation to Green

W hen Paul fish, Ceo at Mountain gear, inc., decided to move into a larger

headquarters and warehouse space in 2006, his most important goal was a healthy workplace. However, as an advocate of green building, he also wanted to embrace envi-ronmental responsibility and, as a community leader in Spokane, provide a model of green building.

abraham Kellogg, leed consultant for this project, describes how the building has been “a catalyst in the area for a lot of people that want to do green building.” He states that, when they were retrofi tting their building, green building “was just getting going in this area.”

Challenges of Being “First” the fact that they were the fi rst project in their area to engage in a green building retrofi t made the project particularly challenging. a particular challenge they faced was fi nding locally manufactured products. another challenge was working with contractors who were still new to the process.

stats

Scope of Projectrenovate existing building to convert to sustainable offi ce/warehouse Project TypeWarehouse with offi ce/administrationOriginal Building Age1960sProject Financingbank loan, utility rebates

LEED Ratingleed-nC goldLocationSpokane valley, Wa (suburban)Project Start/EndMarch 2006/november 2007

PlayersOwnerPaul fishContractorSteverding ConstructionDesigner/Architectenvironomic design

Consultantsairefco, inc.Electrical, Lightingthorton and Sons electric

Size of Building/Size of Renovation160,000 sq.ft. (1 story)/111,526 sq.ft.Project Cost$2,000,000Annual Water Use704,000 gallons (58,656 gallons ($377) per month)

Cost Reduction and PaybacksCompared to Previous Space (which was 80% smaller)Energy Savings (actual)$22,000/yearPercent Energy Savings 50%+ /yearWater Savings (actual)248,263 gallons

Other Business Benefi tsIncreased RentsHigher rents charged after retrofi t (amount not specifi ed)

Products and ProcessesGreen Products and Technologies

improved building envelope ■

with high-performance glass; Motion and daylight sensors to ■

reduce artifi cial lighting use; Carbon dioxide sensors that ■

shut off the fan coil when the rooms are unoccupied; energY Star®-rated roofi ng ■

system which reduces heat gain through the roof by 36 percent; low-emitting adhesives, seal- ■

ants and paints; low-fl ush toilets, waterless uri- ■

nals and low fl ow fi xturesGreen Process Improvements

active recycling Program (all ■

paper, cardboard, metals, plas-tics, glass, wood) reuse opportunities (e.g., using ■

received product boxes and packing materials for shipping) Comprehensive green clean- ■

ing program affecting cleaning solutions, practices and equip-ment as well as staff training and custodial committments to environmentally-conscious procedures.

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Loyola Elementary SchoolMaking Seismic Improvements through Green Modernization

loS alToS, ca

“the sustainable thing to do is to reuse buildings. but absent the cost-benefi ts analysis, we would have lost the argument. We were basically making the best school for the money.”

Seismic Improvementsin order to make seismic improvements, gelfand Partners fi lled in some of the school’s wall-to-wall windows with wood framing and plywood. daylight harvesting light controls, eMS operated clerestory windows and stack ventilation were added to give the building evenly-lit classrooms and an energy-effi cient ventilation system.

Prior to renovation, 60% of the electrical use of the school went towards lighting. by installing a new lighting system, that electrical use was lowered by at least half.

gelfand points out the advan-tages of working with older buildings,

“Most older buildings [constructed] are set up for ventilation and daylight because there was no other choice. So when you go back to retrofi t, you look at how to make it work again the way it was meant to originally.” ■

Loyola elementary School, built in 1948, had some serious seismic problems and was on track for demo-

lition. While solving the building’s structural challenges, lisa gelfand, of gelfand Partners architects, rec-ognized that the school provided an opportunity for retrofi t.

Cost-Benefi t Analysisin the end, the decision to retrofi t came as a result of a simple cost-benefi t analysis. gelfand found that new construction would be more expensive. the school was originally built with steel construction, high ceilings and large window walls, which allowed for larger classrooms and excellent north light. “When we did our conditions assessment,” says gelfand, “we found that its structure, in terms of condition, was completely sound. if we were to demolish it, we would be demolishing something that was 20% of the value of a full building. We could make these into wonder-ful classrooms, and it would be less money than building a new school.”

gelfand acknowledges that the cost-benefi t argument is crucial.

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Scope of ProjectsSystem replacement, structural improvements, site infrastructure replacement and new administrative wingProject TypeSchoolOriginal Building Age1948

Project Financinglocal school bond, Cali-fornia state school bond, utility rebatesLocationlos altos, Ca (suburban)Project Start/End2002/2006

PlayersOwnerlos altos School districtContractorblach ConstructionDesigner/Architectgelfant Partners architects

ConsultantsElectrical, Lightingalice Prussin

Size of Retrofi t29,629 sq.ft.Project Cost$8,000,000Percentage of Project Cost Attributed to Green 2% Expected Payback4 years

Cost Reduction and PaybacksElectricity Savings (compared to average Title 24 school)$45,500/yearPercent Electricity Savings for Lighting (before versus after)50%+ lower energy use going toward lighting


daylight harvesting light ■

controls eMS operated clerestory ■

windows Stack ventilation ■

Green Process Improvements

recycling ■

results

“The sustainable thing to do is

reuse buildings. But absent the cost-

benefi t analysis, we would have lost the argument. We

were basically making the best school for

the money.”

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Continuously Improving & Yielding Better OccupancyPoRTlaND, oR

200 Market Offi ce Building

StrategiesStrategies implemented include water-effi cient plumbing fi xtures, implementation of a solid waste audit to document the building’s waste stream and installation of a gas-fi red microturbine generator.

Improving Occupancy & Other Benefi tsin addition to the improved building performance, the green renovation also helped foster increased occu-pancy. traci Wall, property manager for Cushman & Wakefi eld, states, “We can defi nitely say that our occu-pancy level is beating the market for Class a offi ce buildings in Portland. the average Class a building here

O riginally built in 1973, the 200 Market building has undergone a number of transformations—from

an initial reconstruction in 1988 under the russell development Company to the various other sustainable projects throughout the years. achieving certifi cation under leed for existing buildings (eb) was pursued to quantify and qualify their green building efforts.

Continuous Improvementas part of their continuing process improvement system, they plan to surpass the building’s leed-eb gold status and achieve leed-eb Platinum under the new 2009 rating system.

they also improved their energy Star score. originally having a 79 after the fi rst renovation, their score has since gone up to 96.

When asked about the ongoing improvements, elaine aye, principal at green building Services, com-ments, “once it’s understood how the building performs under existing conditions . . . there’s suffi cient value in terms of continuing to make improvements to the building to reduced operating costs.”

stats

Scope of Projectoperational retrofi t, making efforts continu-ous and ongoing Project Typeoffi ceOriginal Building Age1973LEED Rating

leed-eb gold ■

for continuous ■

efforts, going for leed-eb Platinum under leed 2009

LocationPortland, or (urban)Project Start/End1988/1991PlayersOwnerrussell development Company

ConsultantsLEED Consultantgreen building Services, inc.

Size of Building/Size of Renovation384,000 sq.ft. (19 stories)Project Cost$30,200,000Annual Purchased Energy 5,604,000 kWhAnnual Water Use6,000,000 gallons

Cost Reduction and PaybacksEnergy Savings(actual, audit conducted)

2,536,406 kWh/year ■

69% ■

Water Savings (actual from 2005 to 2006, audit conducted)

Financial: ■ $16,290 ■ Quantity: 1,634,656 gallons Percentage: ■ 79%


Waste heat from microturbine ■

used to preheat water installed new energy-effi cient ■

elevators Water-effi cient fi xtures and toilets ■

dual redundant hot water boilers ■

Self-contained cooling and venti- ■

lating unit on each fl oor Converted all t12 lights to t8’s ■

recycled 95% of construction ■

waste diverted from landfi lls

Green Process Improvements

green cleaning system ■

recycling center ■

building operations manual ■

(overall building)

results

has about a 10–12% occupancy vacancy rate. We have less than 2%.”

other benefi ts include increased notoriety. Wall comments, “tenants are asking us about our leed prac-tices, and the brokerage community is asking us about our sustainability practices. So, we’ve developed a green building checklist that we provide to prospective tenants.” ■

“The average Class A building [in

Portland] has about a 10–12% occupancy

vacancy rate. We have less than 2%.”

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PepsiCo Headquarters BuildingThe Power of Volunteers—Mobilizing Change with a Green Team

chicago, il

the ground fl oor of the offi ce build-ing, which gained leed-Ci Platinum. according to Peter Skirbst, vice president and a/e project principal at the Haskell Company, the leed consultant on the project, “the Sus-tainability Center exemplifi es how [PepsiCo] and their employees are changing their business practices to achieve greater sustainability.”

the extensive paperwork and documentation required for leed posed a signifi cant challenge. “i think having the green team—this all-volunteer army—building the video systems that went into the Sustainability Center, creating competitions between fl oors and recording fl oor energy use and recycling [rates]... just made it so much easier,” says Carey.

A fter PepsiCo offi cially released its corporate-wide environmental policy in 2007, the com-

pany engaged in leed certifi cation for its headquarters building. their motivation was not only to become more effi cient, but also to engage their employees.

according to tim Carey, director of sustainability at PepsiCo amer-icas beverages, “Perhaps the even more important goal was [to create] a building that employees are psyched to work in, that they’re energized about and that they can enjoy and be proud of.”

Infl uence of the Green Team the employees formed an all-volunteer “green team” to encourage employee involvement in the sustainability process and to help achieve the necessary energy savings, waste reduction, recycling and air quality improvement initiatives for the building.

in 2008, the Chicago green team took PepsiCo’s sustainability goals to the next level and initiated the creation of a Sustainability Center on

stats

Scope of Projectretrofi t of building; reno-vation of ground fl oor for Sustainability CenterProject Typeoffi ce; learning CenterProject FinancingCorporate budgetLEED Rating

building: leed-eb ■

Silver Sustainability Center: ■

leed-Ci Platinum

LocationChicago, il (urban)Project Start/End

building: 2007/2008 ■

Sustainability Center: ■

2008/2009

PlayersOwner

building: Cbre ■


PepsiCoContractorPepper Construction

Designer/ArchitectParaCHin design studios, ltd.

ConsultantsLEEDHaskell Co.Lightinganne Kustner lighting design, ltd.ESCoContinental electric

Size of Retrofi t building: ■

425,000 sq.ft (17 stories) Sustainability Center: ■

3,000 sq. ft.Project Cost

building: $1,100,000 ■


$1,950,000Annual Purchased Energy 57.82 kbtu per sq./ft.Annual Water Use530,000 gallons

Cost Reduction and PaybacksOperating Cost Savings (actual)

building: ■

$220,000/year in energy Savings Sustainability Center: ■

$700,000/year in elimination of off-site meeting needs

Energy Savings(actual, audit conducted)2.2 million Kwhr/year

Green Products & TechnologiesBuildingvfd drive, lighting, light sensors, faucet switches, recycle bins, Pla-based utensils, etc.Sustainability Centertile, insulation, carpeting, bamboo, wall coverings, seating, solar panels, wind turbines, toilets, light-ing, solar and wind power, led lighting

results

Changes in Employee Behaviorone of the greatest successes resulting from these projects was the change in employees’ prac-tices. Carey comments, “Probably the biggest success is having people change behaviors…without feeling like they were giving anything up.” these changes included activities both big and small, such as “going to double-sided printing, eliminating energy-hogging printers [and] chang-ing all of the cafeteria materials [to renewable ones].” ■

“Probably the biggest success is

having people change behaviors…

without feeling like they were

giving anything up.”

McGraw-Hill Construction

PresidentNorbert W. Young, Jr., FAIA

McGraw-Hill Construction Research & Analytics/Alliances

Vice President, Global Thought Leadership & Business DevelopmentHarvey M. Bernstein, F. ASCE, LEED AP

Senior Director, Research & AnalyticsBurleigh Morton

Director, Green Content & Research CommunicationsMichele A. Russo, LEED AP

Director, Market ResearchJohn DiStefano, MRA, PRC

Director, Industry AlliancesJohn Gudgel

Reproduction or dissemination of any information contained herein is granted only by contract or prior written permission from McGraw-Hill Construction.

Green Building: Retrofit and Renovation SmartMarket Report

Editorial DirectorMichele A. Russo, LEED AP

Editor-in-ChiefDonna Laquidara-Carr, LEED AP

Contributing EditorJulie Miltner, LEED AP

Senior Group Art DirectorFrancesca Messina

Contributing Art DirectorDonald Partyka

Managing Art DirectorTed Keller

Production ManagerAlison Lorenz

Research Project ManagerRichard Goodier, MRA, PRC, LEED AP

ContributorsCatlin O’Shaughnessy, LEED APMonica Andrews

For further information on this SmartMarket Report™ or for any in the series, please contact

McGraw-Hill Construction Research & Analytics 34 Crosby Drive, Suite 201 Bedford, MA 01730

1-800-591-4462 [email protected]


SmartMarket Report

About McGraw-Hill ConstructionMcGraw-Hill Construction (MHC), part of The McGraw-Hill Companies, connects people, projects and products across the design and construction industry, serving owners, architects, engineers, general contractors, subcontractors, building product manufacturers, suppliers, dealers, distributors and adjacent markets.

A reliable and trusted source for more than a century, MHC has remained North America’s leading provider of construction project and product information, plans and specifications, industry news, market research, and industry trends and forecasts. In recent years, MHC has emerged as an industry leader in the crit-ical areas of sustainability and interoperability as well.

In print, online, and through events, MHC offers a variety of tools, applications, and resources that embed in the workflow of our customers, providing them with the information and intelligence they need to be more productive, successful, and competitive.

Backed by the power of Dodge, Sweets, Architectural Record, Engineering News-Record (ENR), GreenSource and 11 regional publications, McGraw-Hill Construction serves more than one million customers within the $5.6 trillion global construction community. To learn more, visit us at www.construction.com

ResourcesOrganizations, websites and publications that can help you get smarter about green retrofit, renovation and new building

Acknowledgements:

The authors wish to thank our sponsors Autodesk, Siemens and UL Environ-ment, Inc. for helping us bring this information to the market. Specifically, we would like to thank Catherine Palmer and Sarah Hodges; Autodesk; Brad Haeberle and Ari Kobb, Siemens; and Christopher Nelson, Stephen H. Wenc and Julia Farber, UL Environment, Inc.

As always, thanks to the U.S. Green Building Council for their support, in particular Rick Fedrizzi, Rebecca Flora, Doug Gatlin, Tom Dietsche, Anthony Guma, Karol Kaiser, Marc Heisterkamp and Ashley Katz.

A sincere thanks to Chris Ludeman and Raymond Torto from CB Richard Ellis for providing the prospects list for the market research.

Additional thanks to the team at GSA; Kelly Romano and Mary Milmoe, Carrier Corp.; and Chris MacFadden, Turner Construction for their support in the project.

We would also like to thank the many individuals who provided detailed project and performance data on their case study projects as well as Gordon Gill, Adrian Smith and Bob Peck for providing their insights.

Federal GovernmentU.S. Department of EnergyMain website: energy.govOffice of Energy Efficiency and Renewable Energy (EERE): eere.energy.govNational Renewable Energy Laboratory: nrel.gov

U.S. Environmental Protection AgencyMain website: epa.govEnergy Star: energystar.govWaterSense: epa.gov/WaterSense

U.S. General Services Administration: gsa.gov

National Institute of Standards and Technology: nist.gov

American Recovery and Reinvestment Act 2009: recovery.gov

Academia and Nonprofit OrganizationsAlliance to Save Energy: ase.orgAmerican Council for an Energy-Efficient Economy: aceee.orgThe American Institute of Architects (AIA): aia.orgAssociated Builders and Contractors, inc. (ABC): abc.orgAssociated General Contractors of America (AGC): agc.orgBuilding Owners and Managers Association International (BOMA): boma.orgCarnegie Mellon University,

Center for the Building Performance and Diagnostics: arc.cmu.edu/cbpdDatabase for State Incentives for Renewable Energy (DSIRE): dsireusa.orgGreen Building Initiative: thegbi.orgNational Association of Counties (NACo): naco.orgSustainable Buildings Industry Council (SBIC): sbicouncil.orgUniversity of California, Berkeley,

Center for the Built Environment: cbe.berkeley.eduU.S. Conference of Mayors: mayors.orgU.S. Green Building Council: usgbc.org

OtherBuilding Green, LLC: buildinggreen.com

Main Website: construction.com

GreenSource: greensourcemag.com

Research & Analytics: construction.com/market_research

Achitectural Record: archrecord.com

Engineering News-Record: enr.com

Sweets: sweets.com

Green Reports: greensource.construction.com/resources/SmartMarket.asp

usa.siemens.com/industry■■

ulenvironment.com■■

ul.com■■

usgbc.org■■

Green Building Certification Institute: gbci.org■■

autodesk.com■■

autodesk.com/sustainabledesignguide■■

cbre.com■■

1335cvr.indd 2 10/16/09 6:27:11 PM

SmartMarket Report

Produced with support from

Green BuildingRetro� t & RenovationRapidly Expanding Market Opportunities Though Existing Buildings

McGraw-Hill Construction SmartMarket Reports™

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SmartMarket Report

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